Rockwall Housing Market Update for Real Estate October 2022

Hi there, Rockwall!

This week I heard a great line, “There’s no such thing as a national housing market.” The housing market is unique to each city and even varies from submarket to submarket within cities.

So, that’s why I love giving you this update every month because it’s a look at the numbers and gives you insight as to what’s really happening in our local market right now.

And right now, we’re feeling a temporary pause. Sellers and buyers both are nervous since the FED just increased rates again and there’s even more talk about a recession. And when buyers aren’t sure what’s going to happen with the market, they pull back and wait to see where things will go. When seller’s think they’re not going to be able to sell their home, they don’t put it on the market.

So how is this affecting our local market? Well, keep reading to find out.

Hi there, I’m Jennifer Shannon. I’m a Realtor with Keller Williams and the Patty Turner Group. in this month’s market update we’re taking a look at what happened in September and trying to get a sense of what we can expect for October.

Let’s start with interest rates. They’re up again (no big surprise there) to where a 30-year mortgage is now at 6.7% with .9% in fees and points.

When we look at the unadjusted purchase index, which shows mortgage applications, we see that applications last week were down 37% from one year ago. You don’t have to be an economist to know that’s a big drop.

For our local numbers, I’m looking at sales data from September for single-family home sales in Rockwall County. The average sales price was down from last month to $528,340. That’s an 11.4% increase from where it was the year before. So, right out of the gate we have some really great news. So in a world where we’re hearing about how much prices are going down, our data is actually telling a different story. 

We are seeing month-over-month decreases in pricing and will likely continue to see this continue to decline since we’re heading into a typically slower selling season where prices trend down, even in normal markets. Yes, prices typically go down month-over-month going into the fall and winter months, so this isn’t news.

New listings actually went down this month to 226 homes and we’ve been declining since June. We have 16.3% less inventory than last year.

The overall number of homes for sale doubled from last year and we currently have 650 homes for sale. We’re still below our pre-Covid level of inventory when we had 740 homes for sale in September 2019.

We now have 3.1 months of in inventory. In September of 2019 we had 4 months of inventory.

The time it takes for a home to go under contract is an average of 33 days, up one day from last month. In September 2019, it took an average of 59 days before homes went under contract.

Our average sales price per square foot for DFW went down from last month and is now at $197 per SqFt. It’s up 8.2% from last year.

The amount homes are selling for as a percentage of the asking price has dropped for the fifth month in a row and is now averaging 96.3% of the asking price. If we take our average price, that means sellers are negotiating almost $20,000 off the asking price to make a sale. Think of what you could do with that! The tables have certainly turned. 

Let’s talk about this a little more. In this market now, instead of paying $20,000 over asking and adding that to the cost of your mortgage, you’re now getting that in concessions from the seller if you’re buying a house around $500,000. You can either drop the price, which will reduce your mortgage, or ask the seller for that amount in closing costs. This could help you buy down your rate or pay your closing costs so you have that cash for the future. 

You could opt to escrow for taxes and insurance and have the seller pay for your next year. With our property taxes, on a $500,000 home, this could be a substantial savings for you.

So, thought experiment here. If you bought a $500,000 house for 6.75%, at 20% down, you’d have a principal and interest payment of $2,594. So that is NOT including your taxes and insurance. At a 4% interest rate, that would be a $1,910 monthly payment. A difference of $684 per month.

If you saved $20,000 on the purchase of your $500,000 house, you could put $8,000 aside to cover the cost of your refinance and then with the remaining $12,000, that would cover over 17 months of the payment difference from the 6.75% interest rate to the 4% interest rate. This would allow you to buy the house now at today’s cost and refinance later when home prices are likely to be more.

Now how can I be so sure that house prices will be more?

Well, no one can say for certain but here’s what I know.

Jobs in DFW are great and even with the recent news of a slowdown, we’re still on track to exceed our average of 2% job growth for the state.

Our relocation and expansion are still going strong. Since the beginning of 2020, 110 companies have moved their corporate headquarters to Texas. When you look at the top corporate relocations and expansions just in 2021 for North Texas, those resulted in over 9,500 jobs.

Our commercial real estate development is booming. When you look at the top 30 commercial real estate developers in North Texas, they currently have over 61 million square feet of space under development right here in the DFW area.

So when you look at jobs, corporate movements, and all the development happening, we have a trifecta of data points all supporting an increase of housing demand in North Texas.

We’ve had a consistent housing shortage in DFW and starts for single family permits went on a downward trend starting in April and continued that direction until there was a small uptick in August. Starts will likely go down again as builders have a lot of inventory sitting on the market and they’re going to get that sold before they start building more homes.

The Dallas Business Journal just reported that rents in DFW went up 59% over the last 12 months with a median listing rent price of $2,370. Increasing rents at this pace are going to quickly push more renters into the purchase market, further tightening supply.

While I can’t guarantee anything, I say all of this to tell you that it’s quite likely that once buyers get out of the fog they’re in right now and if rates start to soften, it won’t take long at all for buyers to get back in the market, leading to more demand and driving prices back up.

So if you think housing is expensive now, just wait!

Let’s assume that prices go back to a normal 4% year over year return. Now, remember, for September we were at 11.4%. But let’s say things pause a lot more and we go back to the 4%. That $500,000 house from our thought experiment will now go up to $520,000.

If you bought that house now, you’d get $20,000 in equity in one year. Oh, and remember the almost 18 months of payment differences you got covered from the seller concessions? If it took you 18 months to wait for rates to drop and refinance, that $500,000 house would now be worth $530,400, netting you $30,400 in equity. And that’s just assuming a 4% Year over year increase.

So let me ask you, would you rather buy that house now, get seller concessions, keep some money in the bank, and refinance when rates go down, or would you rather wait, spend more on that house in a year or year and a half and end up paying more on your monthly payment anyway?

How do you time this? We may still see a few months of adjusting and pausing, especially if the FED increases rates again at the November 2nd meeting. So maybe you have a few more months to watch month-over-month prices go down a little. But all it’s going to take is a little bit of good news to increase buyer confidence and they’ll jump right back in the market and drive those prices back up. Now, I don’t think we’re going to get back to the insanity of what we saw over these last 2 years, but the concessions won’t be as high, seller’s won’t be as willing to budge, and the good listings will have competing offers.

So, if you’re now thinking that buying might be in the cards for you, let’s talk. We work with buyers who are just starting out all the way to estate purchases and we have sold everything from historic homes up to new construction. Let’s hop on a call to get started and you can reach me by phone or text at 214-803-4444 or start with an email to jshannon@kw.com

If selling is on your radar, the market is back to being competitive and the presentation of your home is critical. You can no longer just put a sign in the yard, pick your price, and get listed on the MLS.

This is why we put a lot of focus into how your home is presented, promoted, and positioned. That means bringing in a home stager and even bringing in furniture for select listings if needed. Creating a website for each of our listings. Hiring a professional photographer. Producing a video. Buying digital ads and so much more.

Our team has sold over $85,000,000 in real estate this year alone. We know what it takes to get homes sold in this transitioning market and leverage all these lessons learned for the benefit of our clients.

So if you’re ready to get started on selling or buying your home, just reach out to me by phone or text at 214-803-4444 or by email at jshannon@kw.com. I’d love the opportunity to interview with you to earn your business.

Well Rockwall, that’s all I have for this month’s update. I look forward to updating you next month on what’s happening in our real estate market. 

Bye now!