Since my last check-in the economic turmoil seems to have leveled off a bit. The ripple effect of the collapse of Silicon Valley Bank is largely over, although there are plenty of vulnerable banks out there. I’ve wondered for years when we’ll face the next economic reckoning, and it amazes me how quickly people have forgotten the lessons we should have learned in 2009.
Looming over the market now is the next meeting of the Federal Reserve. Chances are they’re going to raise rates yet again to combat inflation, although given the government won’t stop printing and spending money it’s like giving a blood transfusion to someone who has a severed artery. “Optimal” inflation is 2%, we’re still 5+. Furthermore, earnings reports aren’t particularly rosey. Fortunately for DFW, we are a top-5 economy and a top-5 real estate market. It’s not to say we won’t be affected in the coming downturn, but we stand to be incredible fortunate.
“But John, you shining paragon of human virtue,” I hear you ask, “Surely DFW is doomed for a market adjustment after the last 2 years of price inflation.”. Well, fictitious person, while it’s true those who bought a home above list price last summer will likely need to sit tight for a couple of years, it’s merely a return to what is normal. There was once a time, let’s call it all of recorded history preceding 2020, when Dallas had a market comparatively sleepy to other major metropolitan areas, when you could count on a steady escalation of prices, usually 3-5% per year.
On a positive front, the housing affordability index had improved a bit. Up from it’s all-time low (low is bad) of 75 last summer, it sits now at 89. Basically 89% of families can afford the median-priced home in the DFW market. We’d love to see that at 100 or higher, but barring a very stagnant market for the next few years, it’s unlikely wages will catch up with prices.
Lastly, as I write this I’m preparing for yet another spring client appreciation party. It’s always a great time and a chance to thank people for their business, referrals and continued support, but I must admit getting the house in the condition for 40 people to come over takes a toll on Kacie. If it was just me, I’d be living off of egg crates and an old ratty leather couch… apparently the standard of living requirement is just another perk of marriage.