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Dallas-area housing market heats up as mortgage rates have cooled

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The map of Dallas-area home sales is less in the red these days.

That’s because lower mortgage rates have sent more buyers into the local housing market during the last few months.

While more than a dozen local residential districts have had fewer home purchases this year, many Dallas-area neighborhoods are seeing a rise in purchases as home loan interest rates have fallen.

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“We are not back to where we were, but once we got past the first quarter, everyone saw the sky wasn’t falling,” said Cathy Mitchell, president of the MetroTex Association of Realtors. “The consumer confidence level is getting back to where it needs to be, and lower interest rates have certainly helped.”

Almost a dozen areas have had double-digit percentage home sales gains so far this year compared with the same period in 2018, according to data from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

Total sales in the Dallas area are up 2% from last year’s record market.

Some of the biggest sales increases during the first nine months of 2019 have been in fast-growing suburban markets, including Prosper (up 24% year-over-year), Melissa (18%) and Allen (15%).

Some local markets that previously had substantial increases in home buys have cooled off this year, including Plano (-6%), the Park Cities (-5%) and North Dallas (-5%).

Home sales in North Texas and around the country sputtered late last year and in early 2019 when the cost of financing a house rose to near 5%.

Likewise, when mortgage rates retreated this summer to near the 3.5% mark, buyers came back to the market.

“We really do have a price-sensitive market,” said Paige Shipp of housing analyst MetroStudy Inc.

Shipp said that when mortgage rates rose, many buyers headed to the sidelines.

“We have a whole generation of buyers who were trained to think 3.5% to 4% is normal for mortgage rates,” she said. “They think now is a good time to buy because this may change.”

Along with the rebound in home sales in many markets, home appreciation has been more robust.

Some of the greatest price increases this year have been in areas with the most affordable houses, including Southeast Dallas (up 12%), Duncanville (up 11%) and Southern Dallas (10%).

Overall North Texas home prices in September were 6% higher than a year earlier, according to single-family sales data from local agents.

Prices are down year-over-year in only a handful of markets, including North Dallas (-10%) and Coppell (-3%).

National housing economists are more optimistic about where the home market is going in the final months of 2019.

“I have home sales rising 1% in 2019,” said Lawrence Yun, chief economist for the National Association of Realtors. “I had thought a mild decline of 2% earlier in the year.”

Yun is predicting that nationwide median home prices will price rise 4% to 5%, compared with his outlook earlier in the year of 2% to 3% appreciation.

A lack of affordable home inventory and rising prices are keeping housing activity lower than it traditionally would be, especially in a market like Dallas-Fort Worth which has one of the fastest-growing economies in the country.

“We still have a great employment market here, and buying is strong,” said Jim Fite, CEO of Century 21 Judge Fite Realtors. “But the market has leveled out compared to two or three years ago.

“We are coming off three or four great years.”

Fite said some of it is a lifestyle choice by younger residents who in previous cycles would be buying their first homes.

“The biggest impact that has leveled home sales is the continuation of apartment construction,” he said. “We are competing with it. Millennials are putting off home buying and getting married.”

Tribune Content Agency

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