Market Review

Let’s look back at the North Texas (and northeast Louisiana) housing market. The distant past can’t predict the future of this market, but we’ve had more than a year of the pandemic. The last year is revealing. Rather than one giant post, I’ll make a few smaller posts and link them together on this post. This post is the basic starting point.

Please also see:

Volume of Price Decreases

Luxury Market Watch

I track several trends for my clients each week. I started tracking the residential market shortly after the pandemic started. I added Price Decreases immediately before “Snowvid 21.” I included the lease market last year when a wheel fell off, and the market got wobbly. I’ll add a monthly peek at the LUX (luxury) market this year. LUX homes are $750K or more.

We also face some unknowns. Namely, 1) will there be a “glut” of forbearance foreclosure homes in this area? [UPDATE 3/9/22: Nothing noticeable.] 2) how much and how often will the interest rates rise this year? 3) how badly will the expected insurance increase on 1 Feb. 2022 affect house affordability (and debt to income ratio)?

A “market value” is the amount a seller is willing to accept AND a buyer is willing to pay. We don’t know this market value until it happens. This year has been unpredictable to all of us. The factors at play in market value are 1) location 2) condition 3) price.

For example, an overpriced house in poor condition but in the right location may still sell. A perfect house in the wrong location won’t sell until the price is right. In the end, price always wins.

At its core, the housing market is about supply and demand. Too few houses have been built since the subprime mortgage crisis in 2008. The housing collapse also reduced demand for trained construction workers and employment has remained stagnant while the age of those workers has increased and pushed some into retirement.

The pandemic put a strain on the supply of building materials. Primarily, mills and companies that produce building materials saw dramatic cost increases in labor, transportation and associated material prices. The pandemic also affected the health of many remaining construction workers.

Meanwhile, more office workers found ways to work from home. For some, crowded city life was not compatible with social distancing. Home became their sanctuary, their workplace and more. Often, they needed more space. Simultaneously, the government reduced the federal funds rate to near zero and bought billions of mortgage-backed securities to spur the economy. Mortgage rates hit historic lows in 2021.

The pandemic and historic low interest rates finally spurred an unprecedented demand. Consequently, housing supply will remain short for the foreseeable future as labor and materials remain low. Meanwhile demand may be tempered by availability and affordability.

I've Got Your Six!

Mark M. Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
214-862-7212
DFWmark.com

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