Attended the industry update session this last week. It was very interesting, it affirmed and elaborated on factors that impact the housing market, in particular the DFW market, and where we might be heading in the future. Topics covered economic factors such as sequestration, government involvement in keeping interest rates low, unemployment, and other topics such as lending guidelines, taxes, and lastly the $798 million Horseshoe Project which is designed to improve the traffic in the heart of downtown Dallas.
The biggest buzz of course was the lack of inventory and rising prices in many areas, and what has driven us to this point and whether it will stay here for a while or it will dissipate soon. This is the shortest level of home inventories in the DFW area since 1980s. As a REALTOR, I had always heard of the multiple offer, over price offers in California and other markets, never thought I would see it here, but it is here and it might stay for a while.
First let’s talk about what caused it..….aside from the economy, job market, changes/restrictions in lending, one of the deciding factors has been a surge of investors buying up properties, interest rates are low, home prices are relatively low, and many metroplexes in Texas have made top news in regards to jobs, housing and growth in the past few years. Texas leads the nation in “in-migration,” with 290,000 new residents between 4/10 and 6/12. It is anticipated that by 2030, between 10 to 18 million people will move to Texas. So it has made buying here a vital and smart choice and Texas an ideal destination for many investors. This started about a couple of years ago and gradually the levels of inventory have gone down until we kind of hit the pivotal point and went from a buyer’s market to a seller’s market sometimes in the 3rd quarter last year. Don’t have the exact date but it happened.
Everyone was hopeful that February will roll around and we would get a ton of fresh inventory hitting the market, alleviating the issue. However, that did not happen…..people scratch their heads and think, well if we are in a seller’s market, then why aren’t more sellers putting their houses on the market. The answer is twofold. And before I delve into that, just a quick side reminder of economy 101 and the rule of supply and demand. Low supplies are driving the prices up.
Now getting back to why sellers are not selling. First, some sellers think they can ride this wave for a while and wait longer for higher prices and bigger profits, makes a lot of sense if you don’t care where your next house is going to be or if you end up paying the same top dollar for the next house you will end up buying after you sell this one, which brings me to the second set of sellers anticipating this price hike, they find it uncertain to sell a house that they like, know well and have cared for in exchange for an uncertain market and few possibilities to choose from. It makes a lot of sense, doesn’t it! There are many reasons why people sell their homes, relocation, life style change, downsizing, upsizing, job loss, circumstance change and if you are selling for these particular reasons, and you really have no choice but to sell, then this is perhaps the best time to put your house on the market and take advantage of the rising prices. However, if you just want to do this because you want to make a profit, then you might want to think it through once or even twice before you sell your house.
And if you are looking to buy and would like a perfect little home that is all updated and is priced well, be ready for a ton of competition and be ready to make full or over the price offers if you can stand the competition not only emotionally but also financially and please don’t take me wrong, there are plenty of ugly houses to choose from as well, if you don’t mind putting some elbow grease and $$ to make it your perfect home and that’s exactly what some buyers are doing out there as well.
Whether this lack of inventory is going to create a mini bubble in the home prices here will remain to be seen. And no matter which side of the fence you are at, the best arsenal you can have is to be educated and be aware of the happenings of the current market so you can make the wisest and the best choice that fits your needs and lifestyle. Real Estate cycles will come and go just like anything else, the key is how you manage to make the best of the market situation. Make sure you hire a professional that keeps up and knows how to handle your particular circumstances in this rather crazy seller’s market.
Happy buying and selling!