Market Watch – 30 June 2023

Click on the photos to enlarge.

Since last week, New Listings are flat while there are increases in AOC, Pending and Closed Properties. The Lease Market has high Pending and Closed Properties as we’d expect on the last day of the month, but New Listings are lower than expected.

It has been a while since I showed y’all the numbers that I track each week. Let’s see how we got here.

After hitting a pause on rate increases two weeks ago, The Fed announced that it plans to increase rates soon and possibly several times because inflation is still higher than preferred. The Fed is also concerned about the Federal Deficit. The Federal Deficit is currently at $1.38T compared to the high point of $3.13T during the 2020 Pandemic (a $1.75T reduction over two years).

The result is higher interest rates to borrow money. This shows up in both the residential housing market and residential lease markets. Both had decreases in every category while June historically sees the highest number of closings.

When we look at the Market Watch Trends, we move through time from the beginning of the pandemic in 2020 (left) to the current market as of this morning (right). The most stunning observation should be that more houses were on the market and selling while we were in lockdown and wearing masks than we currently have. The appreciation on those houses was more than the interest rate. It was pure profit. The demand for houses supercharged appreciation and drove sales prices higher. People – especially corporate investors - were willing to risk their health for those historically-low interest rates. Please let that sink in.

With a few exceptions, we’ve seen more houses entering the market rather than leaving since May 2021 when the interest rates grew beyond investor appetite. This translates to housing inventory and options for individual buyers. However, the cost of borrowing has kept some buyers on the sidelines until earlier this year when there was a surge of pent-up demand – caused mostly by significant increases in the lease prices.

Meanwhile, the Lease Housing Market has run counter to the residential housing market. Volume has steadily increased in both New Listings and Closed (leased) properties. During this tracking period, lease listings first went over 1,000 in North Texas on 10 June 2022. During the same time, the first week with more than 1,000 Closings was 6 August 2021 – the next was 6 May 2022. In contrast, lease listings and closings have both been over a thousand each week since April 2023.

DFW is different than the overall U.S. housing market. More people move here each day. DFW doesn’t have negative prices like elsewhere. There are overpriced houses sitting on the market, but they haven’t lost value. They entered the market too high, and the market awaits their correction to the ideal price.

A balanced housing market has six months of housing inventory. DFW won’t be balanced by definition in the near future. It’s currently a “Sellers’ Market,” which means Sellers have some advantages over Buyers when negotiating prices and terms. However, a house sells for what a Seller takes, and a Buyer pays at the closing table.

I’ve Got Your Six!

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

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