The madness continues.
It’s a weird time to be a Realtor, and I know I’ll look back on this in 10 years and shake my head that I would complain at such a market. Sales prices are skyrocketing. Sellers are laughing their ways to the bank, buyers are crying tears of joy at the closing table, and the commission checks are certainly cashing. “But John, you dashing yet mysterious champion,” I hear you ask, “Why are you complaining about being a Realtor during the best market in the North Texas’ history?” Well, dear reader, it’s because I’m from Dallas and remember a time when we were among the most undervalued markets in America. Although it took several years for people to realize the return on investment of buying a home, they were usually house-rich and not having to scrape the top of their means to find a good home. Now it’s as if a trap has been laid, with rapidly-appreciating prices as the spring and interest rates as the pressure plate. Rates have gone from under 4% to 5.65% in the last 4 months and will continue to climb. As they do, it will make housing less-and-less affordable until someday the average young person or couple will no longer be able to afford a house inside the 635 loop.
What is fueling this rapid appreciation? As I’ve said before, basic supply-and-demand economics. If tens of thousands of people fleeing California and the west coast is the wood, Covid and supply shortages are gasoline. We’re more than 2-years behind on new construction inventory, causing more demand to be placed on pre-owned homes. However, there is a bit of hope on the horizon with a slight uptick in new single-family inventory compared to March 2021. This might be an anomaly, but hopefully it’s a sign that supply is going to start catching up ever so slightly.
To put interest rates in perspective, the average interest rate going back through the 20th century is right at 8%. It’s hard to complain knowing that about 4.65 or even 5%, but considering what we’ve been used to, buyers are certainly feeling the monthly payment sticker shock.