Dallas Housing Market Update September 2023

Hey there, Dallas-Fort Worth

In this month’s real estate market update, we’re talking about how we compare to the pre-pandemic real estate market to get a sense of where we might be headed over the next few months.

You’ll learn how New Homes sales are outpacing resale homes in this staggering data point showing double-digit growth.

And, of course, we’ll hit on the monthly market numbers for DFW.

So, let’s get to it.

First let’s talk about how we compare to the pre-pandemic real estate market. When we look at the data from August 2019 compared to August 2023, here’s what we see.

Interest rates are up 3.19%.

The average sales price is up 50.3%.

The average days on market is currently 41 days which is 8 days less than where we were in August 2019.

Our months supply is down 27%.

Our percent sales price to original list price is just .1% more than August 2019.

But our homes for sale is down 33%. 

Why is this important? Well, the market is highly responsive to what the FED is doing. Home sellers are in a bit of a panic because things aren’t moving like they saw in the last few years. We collectively have amnesia about the market (us Realtors too) and are waiting for better days.

The challenge with holding out too long is that we’re in a pretty normal market that happens to be leaning into buyer’s market territory but that’s better in many ways than it was in 2019 so both sides win. 

Sellers are making more because prices are up so much and buyers have negotiating power to help with a rate buy-down or other concessions. 

Our days on market are down. Our months of supply are down. Sellers are pretty much negotiating the same amount off their list price now as they were this same time 4 years ago. What’s advantageous and working to keep prices where they are is the fact that there’s so little inventory. We’re down 33% in the number of homes for sale. And keep in mind, we’ve had a lot of movement of people coming to the DFW metroplex over these last few years.

For a little stroll down memory lane… I remember the 2019 market very well because back in 2019, I bought my house. I was watching the market closely waiting for a new build opportunity. I kept watching the prices drop and drop. I’d get the builder emails about the latest inventory price reductions and additional incentives. I was playing a risky game trying to time the market just right where I’d hit it just before the market went back up. 

I got to a point where I wasn’t sure if the market would go down much more and I found a home that checked a lot of boxes for my family, so I decided not to risk it any more and I bought a builder inventory home - which I believe, more often than not, is the best deal you can find.

Come to find out, I didn’t time the market perfectly and it still went down for a few more months, but then it stopped going down. Then it turned around and went up. Because that’s the overall trend of real estate. Just like the stock market. Sure, you can single out dips and bubbles, but over an extended period, history has shown the return on investment to be positive.

I say it all the time that you never know when the market was at its best for your position until that time has past. So did I get the best deal? No. And there was no way for me to predict that. But did I still get a good deal? Yep. 

I tell you that story because I understand the position buyers are in right now. You want to wait for things to get perfect. Better interest rates. Or maybe more inventory. 

The issue with that is that we have this compounding pool of buyers right now who are holding out for that perfect purchase scenario to unfold. As soon as rates go down, you and thousands of your similarly-thinking peers will be going after the few homes for sale on the market.

Many people think that once rates go down, we’ll get more sellers in the market too. And to some extent, that’s true. But consider the fact that an estimated 82.4% of people have a mortgage at or below 5%. That is a lot of people who are going to need a very compelling reason to move to give up that interest rate. It’s why we’re seeing stats like a 33% drop inventory. Sellers don’t want to lose their interest rate because they don’t know when they’ll get it back. Even the experts don’t anticipate rates going that low next year. 

Goldman Sachs predicts an average of 5.9% for 2024, NAR, Morgan Stanley, and Moody’s Analytics predict 6%, Fannie Mae predicts 6.1%.

Most of your inventory to hit the market will be from sellers who have to move or sellers who can pay cash for the next home so interest rates don’t matter.

So you’ll have more buyers in the market with a limited number of homes to buy, which will push prices up more and put us back in that crazy multiple-offer market where people offered insane amounts over asking to win the bidding war. 

What you’d have to offer to compete in that market would quickly erase the savings you’d make from that lower interest rate you held out for. Not to mention the fact your property taxes would be assessed on that higher property amount. Buying today locks in your cost of living. 

If you’re a buyer, this last quarter of this year, and maybe January of next year, might be as good as it gets.

For sellers, you have a little more flexibility. In fact, I’m telling our sellers who can wait, to wait until early next year to go on the market. I do expect softening of interest rates and more buyers to come into the market as the spring selling season ramps up. So I think it’s possible prices could go up a little more after they go through their typical winter lull.

And I think builders are going to help push those prices up. Okay, so in the intro to the video I mentioned how New Homes sales are outpacing resale homes in this staggering data point showing double-digit growth.

That data point I’m referring to is mortgage applications. According to the Mortgage Bankers Association, applications for new homes were up 20.6% compared to a year ago. When you look at overall mortgage application data, we are down 27% from one year ago. That is a huge swing in demand.

Builders can do what many regular home sellers can’t, and that’s offer huge incentives and interest rate buy-downs. When a buyer can pay a mortgage rate of effectively 5.25% for the first year of owning the home along with get some closing costs paid for to reduce the cash they need to bring to closing, that’s an enticing offer.

The demand is shifting to new construction. When that happens and builders start to get more contracts, they raise prices. That increase starts to trickle down to the resale market as some buyers look at the increasing cost of new construction and determine it’s just better to go with a resale home and try to negotiate similar new-build incentives. Which some sellers are more than happy to pay!

So given all of this news, how did the DFW real estate market perform for the month of August?

The average sales price was $467,475. That’s a 1.6% increase from our average price last year. 

New listings went up slightly from last month and we’re at 14,507 new listings. 

We are down 1.5% from last year. 

The overall number of homes for sale has gone up four months in a row and is now at 29,635 homes. That’s a .8% increase from this time last year.

The number of closed sales went up from last month to 10,461 sales. We’re down 9.1% from last year..

We now have 3.2 months of inventory. It’s up a little from last month where we were at 3.1 months and up a lot from last August where were just at 2.8 months of inventory. I think we’re going to see that pattern persist for the rest of the year.

The time it takes for a home to go under contract is an average of 41 days and that stayed even with last month but is up 64% from this same time last year.

Our average sales price per square foot for DFW decreased to $202 per SqFt. and is down 1.5% from last year.

The amount homes are selling for as a percentage of the original asking price went down again. Homes are now selling at 96.1% of the original asking price. Last year at this time they were selling at 97.7%.

The takeaway is that if you’re considering a purchase, your window to get a great deal is likely closing soon. Prices may get a little lower over the next few months but timing the market that precisely is tricky. 

And if you’re thinking of selling, selling now still nets you a great return compared to traditional real estate market returns if you’ve owned your property for more than 2 years. But, if you can wait until interest rates go down to get on the market, you’ll likely increase your negotiating power and net return on your sale.

Those are the numbers for August, but I’m curious to know what questions you have about this market. Let me know by commenting on this video. 

And if you like being in the know about what’s happening with real estate in DFW, be sure to like and subscribe to this channel.

I’m Jennifer Shannon and I’m a Realtor and Broker Associate with Keller Williams.

If you have any real estate plans for the next 12-24 months, let’s schedule a no obligation strategy session to explore the opportunities of buying or selling in today’s market. You might be surprised at some of the opportunities available.

Simply go to CrazyRealEstateMarket.com or you can reach me by phone or text at 214-803-4444 or start with an email to jshannon@kw.com. 

I work with a team of market experts and we thrive on having our finger on the pulse of the real estate market so we can serve our clients the best. 

So if you’re ready to get started on selling or buying your home, just reach out to me by phone or text at 214-803-4444 or by email at jshannon@kw.com or schedule a no obligation call at CrazyRealEstateMarket.com. I’d love the opportunity to interview with you to earn your business.

Well Dallas Fort Worth, that’s all I have for this month’s update. I look forward to updating you next month on what’s happening in our real estate market. 

Bye now!