Market Watch - 13 Sept. 2024

Since last week, New Listings, AOC (Active Option Contract) and Pending have increased while Closed Properties decreased. The Lease Market increased Listings and Pending Properties with a sharply lower-than-expected number of Closed (leased) Properties. This is the lowest number of leased properties since 29 March 2024.

Let’s see how we got here.

After holding on interest rates while unemployment slowly increased, The Fed announced plans to decrease rates soon (18 Sept. 2024) and possibly several times later this year because inflation has stabilized while unemployment became higher than preferred.

The result is lower interest rates to borrow money. This change shows up in both the residential housing market and lease markets. Both have been sluggish for the last few months in anticipation of lower lending rates.

The timing is unfortunate because many home buyers use tax returns in the spring to boost their down payment. Additionally, they tend to move at the end of the school year to be settled before the beginning of the new education cycle in the fall. Without this available cash and unemployment affecting potential buyers, the housing market may not get the long-awaited bounce – especially since school has started for the year.

When we look at the Market Watch Trends, we move through time from the beginning of the pandemic in 2020 (left) to this week’s market (right). The most stunning observation is the prolonged inventory increase. It’s a reversal of the pandemic anomaly from October 2020 through March 2022 when housing inventories Closed faster than new Listings arrived.

The number of Closed houses remained relatively stable and cyclical since 2020. This reflects a constant and sustained influx of new residents to the DFW metro area. During this time, local home prices first increased due to shortages and interest rates later increased due to The Fed lending policies. The combination of factors made housing less affordable to most folks.

We’ve seen more houses enter the market rather than leave since May 2022 when The Fed first increased interest rates by .5%. This adjustment translated to housing inventory and options for individual buyers. However, the cost of borrowing plus inflation has kept many buyers on the sidelines despite significant increases in lease prices.

Meanwhile, the Lease Housing Market has steadily increased volume in New Listings and Closed (leased) properties since 2021. An average of more than 1,000 homes were leased each week in 2024 while even more new listings arrived on the market. This week had one of the highest gaps at 524 more lease homes entering the market than leaving.

DFW is different than the overall U.S. housing market. People move here each day from other worldwide locations. Overpriced houses sit on the market, but most houses haven’t lost value (appreciation). They entered the market too high while the market awaits their correction to the ideal price.

A balanced housing market has six months of housing inventory. With a few localized exceptions, DFW won’t be balanced by definition soon. It’s currently a “Sellers’ Market,” which means Sellers have some advantages over Buyers when negotiating prices and terms. However, a house sells or leases for what an owner takes, and a Buyer/Tenant pays in the closing documents.

I’ve Got Your Six!

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

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