The housing market has been crazy for the past few years, and it’s time for another check-in. Has anything changed? What does the housing market look like right now? Let’s find out in today’s housing market update.
A Quick Look Back
During the lockout, interest rates lowered to unbelievable rates. We were looking at interest rates in the 2% range. Because of this, some people that may have been considering moving instead chose to refinance their homes to get better interest rates on their mortgages. A lot of people used that money they were saving with their new interest rates to upgrade their current homes.
As a result, we saw fewer houses go onto the market. Not only were 2020 and 2021 the only years in recent history where we saw a decline in the number of houses available on the market, but those years also saw an unprecedented increase in the number of people moving to Texas. You can already see why this has created a bit of an issue. During those years, the number of houses available was decreasing and the number of buyers was increasing. There simply was not enough supply to meet the demand. Add in the fact that there were supply chain issues and material shortages which meant that new houses could not be built fast enough and you can see why the housing market has been so crazy in Texas.
For the past two years, we’ve had an incredibly out-of-balance, seller-friendly market which has driven house prices up across the metroplex. Entry-level houses now cost approximately $300,000. Just a couple of years ago, they were only around $260,000.
The Market Right Now
For the past two years, the number of houses coming off the market in a month was almost always more than the number of new houses coming onto the market. A couple weeks ago we saw an interesting flip. For the first time in a long time, we saw more houses come onto the market than leave it. We saw an increase in inventory! If this continues through the end of the month, we could see up to nearly two months worth of inventory. That’s still a far cry from the usual six months that we used to have, but it is a step in the right direction.
It is still very clearly a seller’s market, but it is interesting to see things might be starting to turn around.
So, why is this happening? I think it’s closely connected to the interest rates. They have gone up quite a bit since the start of this year and it’s possible that they are impacting people’s desire and even potentially people’s ability to buy a house.
How will this increase in inventory impact the market? For the foreseeable future, houses will still be very expensive. Because most people do not pay close attention to everything that happens in the market, most people are still going to offer way over the asking price on houses. If people continue to do this, the market will remain very competitive, but I would be very careful if I were buying a house right now. Because things might be slowing down, it’s likely that this period of drastic increase in home value might be coming to an end. If this is the end of that run, you do not want to greatly overpay for a house.
With that in mind, it’s important to note that I don’t think houses are going to lose value rapidly. If you’re thinking about waiting for prices to come back down, you might be waiting for a really long time. They may never come back down to where they were. The market may be starting to slow down, but that does not mean that prices will ever go back down. It just means that prices won’t increase so quickly.
If you’re thinking about buying a house right now, it’s still a seller’s market so you will definitely need to make a competitive offer, but I would be careful with how far over the asking price you’re willing to go. This is especially true if you’re going to be at that house for just a couple of years.
If you want to find some ways to make a competitive offer without simply offering more money, you can check out our 7 Tips from a recent blog post.
If you have any questions, want to know more, or would like to buy or sell a property, don’t hesitate to call the number on our website. We would love to help you with all your real estate needs.
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