It is a seller’s market on steroids right now in Texas.
Healthy housing inventory is typically six months. But some cities in Texas, including Austin, are down to days.
Todd Tramonte is a well-known real estate marketer and broker in north Texas. And he has some stories.
“We have women swinging umbrellas at other women on sidewalks because they literally are, it’s like children at school, they’re fighting over who was in line first,” Tramonte said on Y’all-itics. “We’ve had 80 plus offers on homes. We have had 100 plus showings on homes.”
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Anne Lakusta is a broker for more than 3,000 real estate agents.
Her outfit at GO Management Real Estate/Keller Williams Realty did more than $8 billion in business last year, so they know real estate.
Lakusta said consumer protection is a growing concern, as some home buyers are entering into contracts that do not guarantee the final sales price.
That’s because builders simply don’t know how much some material might cost because of several shortages in the supply chain.
“It’s not that it’s not a legitimate concern,” Lakusta said. “They don’t know how much lumber is going to be. They don’t know how much the bathtub is going to be, the windows, the insulation. There’s missing information. But you’ve signed on saying that you’re going to pay for this, and you don’t know either.”
Lakusta expects that some of those materials were on that big stuck container ship in Egypt’s Suez Canal, so even it could impact Texas real estate.
So, what’s driving the housing frenzy?
Both Tramonte and Lakusta said it all comes down to simple economics: supply is not nearly keeping up with demand at this point
“Lots of people want those houses and there’s not enough for them to have,” Tramonte said. “The one extra factor I’ll throw on right now is that borrowing money right now is borderline free.”
That’s one reason Lakusta is also keeping an eye on affordability, which is becoming a huge concern in the industry.
Home buyers moving on to their second, third or even fourth houses are having to pay more for everything, especially renovations, but they’ve at least built up some equity.
But the entry point price to get into a house in the first place has jumped, sometimes dramatically, making it harder for younger folks and first-time buyers to get in to their first homes.
“If home ownership is going to get more expensive, what do we have to do to interest rates to keep it all affordable?” said Lakusta.
With interest rates already at historic lows, there isn’t much wiggle room with them.
So Lakusta wondered if the country is heading towards homes being considered luxury items, which is not conducive to building a middle class.
Both of our experts said we are definitely not living in a bubble, because there is no end in sight.
Tramonte said it’s easy to see why.
Individuals and corporations continue to move to Texas. Businesses are still providing good quality jobs with decent salaries. Finally, builders aren’t building as fast as people are buying, so there is still plenty of room for that gap to close.
“D-FW is one of the most stable markets relative to the rest of the country and the world,” Tramonte said.
If you’re not in the market right now, don’t think you’re out of the woods. Texas is a property tax heavy state, which means you’ll be paying more too.
“Property taxes is one of the very few areas that other parts of the country point their finger at us and laugh,” Tramonte said. “There is no running from these property taxes, right? When your neighbor sells a home that he bought for $300 [thousand] for $650 [thousand] four years later, your property valuation based on the county assessor is going up.”
If you’re heading into the market now, Tramonte recommended that you evaluate whether you can truly afford a home.
If not, you should likely sit it out.
But if you can and the prices or the competition is scaring you away, he has one piece of advice.
“While you sit out, the price goes up,” he said.
In fact, Tramonte said the current conditions in the housing market make it possible for a home buyer to make some money on a house in between the time they make an offer and actually close.
Tramonte said home values in North Texas, for instance, jumped 24% over the last 10 months.
So that would represent a 2.4% increase, on average, every month.
If it took you 30 days to close on a house, Tramonte said that means that home’s value jumped 2 to 3%.
“I’m seeing that on a daily basis.”