DALLAS — Prospective homebuyers have been through a lot of ups and downs this year. Early in 2022, there was extremely short housing inventory, making it hard to find a home for sale.
That also meant that if buyers did find a home, there were a lot of competitors bidding on the same property. That, in turn, helped to quickly escalate home prices, with common stories of homes fetching up to six figures more than the asking price.
Some potential home buyers just couldn’t afford this market. But some may have just gotten cold feet when considering jumping into such a hot market, worried that it was going too high too fast.
Many who bought homes saw handsome value increases
But Anne Lakusta, a real estate broker with GO Management, Keller Williams Realty, says real estate has proven over the years to be a solid investment.
She points out a review by Core Logic recently that found the average Texas home went up $54,000 in value from the middle of last year to the middle of 2022. Lakusta points out, "The thing that is funny about this is that some people made more on their house than they did in their job last year".
The second half of the year has been a lot different than the first
Of course, in the second half of 2022, home prices have leveled out, and have even been falling substantially in parts of Texas. And there is far more inventory for sale in many places that we saw at the beginning of the year.
But those positive developments for buyers are caused by a costly change: Mortgage rates have shot up a lot, making financing a home much more expensive than it was one year ago.
What’s next? It’s important to watch building permits
Buyers and sellers always want to know what is next. Lakusta says pay attention to building permits. Those are key because more new housing has to be built as jobs are created, so that workers have somewhere to live.
According to this report, the historical average in the U.S. has been one building permit for every two new jobs. But Texas cities aren't keeping up. In fact, the ratio of building permits to new jobs is really off that mark in DFW, “Dallas-Fort Worth is one for every five new jobs”. That is part of the reason why DFW was found by the National Association of Realtors to have a housing shortage.
Lakusta says the need for more housing in North Texas is encouraging for the market, "I do not believe that we are going to have a housing crash. We need rooftops."
Look for deals on newly-constructed homes
Even though there is more inventory of existing homes to choose from than there was at the beginning of the year, Lakusta says buyers looking here at the end of the year should consider new construction because builders are, “Very motivated to move their inventory by the end of the year".
Since the housing market slowed down here because of rising mortgage rates, there are brand new homes sitting there, available. Lakusta says if you are a ready, willing and able buyer you stand a good chance of encountering a ready, willing and able builder, who is, “more inclined to make a deal. Many of them have their own lender. So they can offer more aggressive mortgage rates.”
But she cautions: You likely only have until the end of the holidays to open up those gifts from home builders, who may not be nearly as motivated come January, “A lot of them…their line of credit rides on a calendar year, so they are trying to not run up against penalties and extra interest payments and all those things by carrying inventory from one year into another."