We’re not really sure what’s going on right now with the market, prices and the recession. There are people smarter than me (God knows there are plenty…) who can more accurately predict the next 12-24 months, but the best I can tell you is a grand “price correction” is not on the horizon. It’s possible, however, that buyers who closed this year may be in for a dose of historical context.
Back in ye olden days (ie all of recorded history up to 2020), Dallas had a comparatively sleepy market. The rule of thumb was you could expect to make a nice profit off the sale of your home if you lived in it for 3-5 years, all other variables equal. Those days may be here again for a time, and they need to remain for several years for home affordability to re-balance. The average person should be able to afford the average house (a rating of 100). We’re now standing around 76.
76 isn’t catastrophic – Los Angeles and San Francisco are 16 and 17, respectively – but it’s still not optimal.
So where are prices going? We saw a roughly 20% increase in sales prices from January-May. A $400,000 house in January was selling for $440,000, a $440,000 house in March was selling for $480,000 in May. Where we are now is likely somewhere in between. A-Tier houses (houses perfectly updated with universal appeal) will likely hold their value going forward due to continued low supply, but B and C-Tier homes will likely sell this fall somewhere in between where they would between March and May. I know this isn’t scientific, but it’s the best anecdotically I can do.
As always, call me if you have any questions or insights. I’m never too sure of myself to not listen.