Dallas Real Estate Market Update March 2023

Hey there, Dallas-Fort Worth

It is March! Spring is on the horizon and it is a favorite time of year for a lot of us Realtors. SPRING SELLING SEASON!

But I hear you. You’re on the fence. You don’t want to sell and you also don’t want to buy. We see it in the data!

Today, we’re going to have a little tough love talk. Of course I’m going to go over all the sales data from last month and we’ll see how the market is changing given the interest rate increases. 

But I’m also going to talk about your quality of life goals and if it’s worth being at the mercy of whims the Federal Reserve. We’ll talk about locking in your cost of living in this wild environment with constantly fluctuating interest rates, home prices, and rental rates.

So, keep reading.

Hi there, I’m Jennifer Shannon. I’m a Realtor with Keller Williams and as always we’ll get in to the month over month sales data for DFW but, like I said in the intro, this month I want to have some real talk about what’s keeping you from buying your next home.

We are hearing this a lot that buyers don’t want to buy because of interest rates and they still think prices will go down. Sellers don’t want to sell because they don’t want to lose their great interest rates. And we’re seeing a little bit of the same issue as we saw last year where sellers don’t want to list their homes when there are fewers buyers in the market. It’s a standoff between the two and we’re seeing inventory levels go down at a time when they should be going up.

If there’s anything we’ve learned over the last few years for the real estate market, it’s that it’s constantly changing. Interest rates, home prices, and rental rates are all very temperamental.

I’ll elaborate on the rental rates.  In DFW, compared to last year, the average cost of a single-family home rental has gone up 5%, or $196 a month. If you happen to be renting in Dallas County, the average rental cost for a single-family home went up way more than that and increased $525 per month, or a 13% year-over-year increase. It makes renting more volatile than interest rates.

So for those who are staying in the rental market to wait out the market for better pricing and interest rates, that’s a very expensive and risky move. Are there blips in the home price index? Sure there are. But we are talking about the larger swings here. Do you know what’s worse than paying 7% interest right now? Paying 100% interest right now by renting and being at the mercy of your landlord’s desired rate of return. 

I know it’s an extreme example, but I look at my grandparents who bought their house for just under $60,000 back in 1963. They still live in that house and it’s now worth $575,000. That’s an annualized return of 3.84% or an overal return of 858.33%. 

When you buy now you lock up your home price which historically speaking, will only continue to rise. 

And here’s the great thing, if interest rates go back down, great! You can refinance. And if interest rates don’t go back down, then also great! Then you will be paying a lower rate than all those folks who bought after you.

Now for those of you who already own your home. I have some real talk for you too. 

There are always reasons people want to buy and sell real estate. What are your motivations for considering a new home in the first place? It’s probably because you see something in your overall quality of life that you would like to improve. Want to be closer to work? Want to move your kids to a better school district? Be closer to family? There are all types of motivations. Maybe you want a bigger house that your family can grow into. Maybe you’re just ready to downsize. So let me ask you this question… Is saving a few hundred dollars on interest per month for a few years in hopes that prices and rates go down worth putting that quality of life improvement off? Especially if there are ways to negotiate having the seller pay the increased cost of your interest payments. Would it still be worth waiting?

We get so caught up in getting the best deal at any point in history, that we often put off things that are not so easily quantifiable… Like happiness.

So if you want be at the mercy of the whims of the Federal Reserve, and the federal funds rate… I get it. We all want to feel like we’re not leaving anything on table. But I’d ask you to consider, what you might be leaving on the table in this tradeoff is peace of mind. I’m going to get a little intense here, but no one on their deathbed talks about what a great interest rate they got. They talk about families, relationships, friends, and contributions. If your next home purchase is motivated by growth in those areas, I’ll ask you again, why put off this quality of life improvement? Especially if there are ways to negotiate having the seller pay the increased cost of your interest payments for the first few years. If that’s taken care of, then what’s stopping you?

If you’ve watched the latest videos, you’ve heard me talk about interest rate buydowns. It’s a way for you to pay a lower interest rate the first two or three years of living in your home. The seller pays for this increased interest expense on your behalf. I work with some great lenders who can get this set up at no extra cost to you. So contact me if you’re ready to get started with that.

Okay, so now onto the numbers. Let’s take a look at what happened in the real estate market for DFW in February

Let’s start with interest rates. As of March 10, the average rate for a 30-year fixed rate mortgage was 6.73%.

The latest data from the Mortgage Bankers Association says that application volume actually increased 7.4% week-over-week.

For our local numbers, I’m looking at sales data from January from our entire MLS.

The average sales price went up 4.1% from the same time last year. Our current average sales price is $434,938.

New listings dropped to 9,826 homes. We are up 3.3% from last year but there are a few problems with this. First, we were already low on new listings for this time last year, so the fact we’re only up 3.3% doesn’t really say much. Second, we went down. This number should be going up steadily until June. 

The overall number of homes for sale has gone down four months in a row. We currently have 22,231 homes for sale. Again, this number should be going up.

In February 2020, you know, that last month before we were shut down, we had 37,900 homes for sale. We are down 36% from that time.

The number of closed sales went up in February to 7,957. Month-over-month we had a great 39% increase in the number of closed sales. We are down 5.4% year over year.

We now have 2.3 months of inventory. Our months of inventory has been declining the last few months and it shows that the demand is still there, even with higher interest rates.

The time it takes for a home to go under contract is an average of 59 days, up three days from last month. In February 2020, it took an average of 63 days before homes would go under contract.

Our average sales price per square foot for DFW increased to $193 per SqFt. and is up 1% from last year.

The amount homes are selling for as a percentage of the original asking price improved last month and went up after seeing nine straight months of declines. Homes are now selling at 94.2% of the original asking price. 

And those are the numbers.

If you’re thinking of buying, Let’s hop on a call to get started. I would be happy to tell you all about 2-1 rate buydowns and 3-2-1 rate buydowns. You can reach me by phone or text at 214-803-4444 or start with an email to jshannon@kw.com. 

We work with buyers who are just starting out all the way to estate purchases and we have sold everything from historic homes up to new construction. Speaking of new construction, we are working on a separate resource for new construction. We are building out a map where you can search all the builders and new construction neighborhoods in an area and get more information about pricing and availability. Go to NewHomeLivingDFW.com. Right now we have about 200 communities plotted on the map. It’s a great resource if your considering new construction.

And sellers. The market is back to being competitive and the presentation of your home is critical. You can no longer just put a sign in the yard, pick your price, and get listed on the MLS.

This is why we put a lot of focus into how your home is presented, promoted, and positioned. That means bringing in a home stager and even bringing in furniture for select vacant listings if needed. Creating a website for each of our listings. Hiring a professional photographer. Producing a video. Buying digital ads and so much more.

In 2022, our team closed 285 deals worth over $130 million. We know what it takes to get homes sold in this transitioning market and leverage all these lessons learned for the benefit of our clients.

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. 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. If you like getting this information, be sure to like, subscribe, and comment to let me know what you thought of this video. I look forward to updating you next month on what’s happening in our real estate market. 

Bye now!