If you're looking to buy or sell a home, pay attention to housing reports that are due to be released this week.
The new data will give us an idea of how homebuilders are feeling about the market and how mortgage rates are affecting demand.
On Wednesday, new data expected to be released will show another increase in mortgage rates, which has started to cool the hot housing market. U.S. existing-home sales decreased 7.2% in February and economists are forecasting another drop by 3.7% for the month of March.
NBC News reports home prices are up about 15% over the past year and as much as 30% in some cities. Available homes had been in short supply even before the coronavirus pandemic started just over two years ago.
The goal of homeownership does not come cheap, which is why experts say it’s important to prepare yourself with this knowledge.
The latest news from around North Texas.
HOUSING PRICES IN NORTH TEXAS
Median home prices across North Texas jumped significantly in March, up by 22%. The increasing rates can not only be blamed on the pandemic but now on inflation and rising mortgage rates.
"We were expecting rates to rise, but they went a little bit faster than a lot of people predicted they would,” Ryan Price, Virginia Realtors Chief Economist, told NBC News.
There’s also a huge generation of Millennial homebuyers entering the market at a not-so-ideal time.
"What I think is so important for everybody to realize is this demand is not from COVID,” explained Stacy Esser with Stacy Esser Group Realty, to NBC News. “This is not because we had this supply or people were racing out of cities and they wanted suburban. This is demand because of our demographic. We have the largest ready buyer pool demographically than we've ever had in U.S. history.”
EFFECT OF MORTGAGE RATES
The higher mortgage rates mean new buyers are going to pay more money.
So what does that mean? Your monthly mortgage payments will go up by several hundred dollars if you buy now, compared to a year ago.
LOW INVENTORY IN NORTH TEXAS
Adding to all this, the inventory of affordable housing is still very low across the country, especially in North Texas. It’s pitting homebuyers against each other to compete for what is available.
According to the Texas Real Estate Research Center at Texas A&M University, there were only 2,418 homes listed for sale in Dallas-Fort Worth in March. That’s down 88% from the 20,853 available two years ago.
"We have prices rising, we have purchasing power going down as rates are going up because there's so little housing available,” said Price.
PREPARE A BUDGET
Additionally, the latest data shows houses are selling 4% over asking price in all North Texas counties.
“If you don't have cash to help at least supplement the amount of money you're financing to buy a house, it's difficult,” said Chandler Crouch, a DFW real estate broker, in a recent interview with NBC 5. “It’s difficult for buyers that don’t have a lot of cash on hand because there’s so much competition. You have to do what it takes and win to beat out other buyers in the marketplace.
Crouch further explained, “As unfortunate as it sounds to see interest rates rising, I’m hopeful that allows the market to correct a little bit because we’re in extreme times right now and it needs to balance out a little. The insanity we’re in can’t sustain for much longer, I don’t think.”
MORE ADVICE FOR TEXAS HOMEBUYERS
Experts say it’s important to get a real estate agent to be in your corner if possible, otherwise, it will be hard to negotiate and sort through paperwork on your own.
It’s also key for homebuyers to know exactly what they are looking for in a home, be prepared to move fast, and understand that a rejection on an offer is very likely.
"What might be true for the North Texas area or the entire country may not be true for the subdivision that you want to buy or sell a house in. So, it's really important to look at your specific goals and be open-minded and be optimistic."
According to the Dallas Morning News, homebuyers can also look into waiving contingencies and offering a leaseback as a way to stand out to sellers.