It would appear the eruption has ended, at least for now.
There is still an ungodly amount of money pouring in from California, the land where people sold their shanties for $2 million and threw it around like Monopoly Money on the DFW market. But with skyrocketing interest rates comes diminished home affordability. And it needs to calm down, at least for a time, before Dallas turns into California.
Above graph for the DFW metroplex and affordability. It measures the median home price in a given area relative to what the typical family can afford with a 30-year fixed-rate mortgage. An index of 100 means the average family can afford the median sales price. We were once at twice that number, now we’re at .75. Dallas was historically one of the more undervalued markets in the United States. Unfortunately those days are over. All the way through 2013 DFW was a very cheap place to live. Now the number hovers around .75.
Interest rates are going to continue to affect affordability, at least for we mere mortals who have not just sold our shanties for $2 million. As of 6/23, a 30-year fixed-rate mortgage is hovering around 6.125%. Still below the historic average of around 8%, but expect them to be up around 7% by the end of summer. In short, the days of cheap money are over.
This has to be the hottest June I can remember. We all must consider the last several years, while humid, have been compartatively mild. We’ve had 6 days over 100 as of 6/22. In all of 2021 we had 8 days, 2020 9, 2019 14 and 2018 23. The record was 71 set in 2011. Here’s to hoping we don’t set any records moving foward, although I’ll take dry heat over humidity.
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