Home buyers are cooling off.
In the USA, the days of double-digit price gains for the housing market are over.
With slowing sales and higher mortgage costs, home prices are no longer soaring at the rate they were a year or two ago, said Lawrence Yun, the top economist for the National Association of Realtors.
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You may have noticed in the past couple months the economy is good but the home buyer interest appears to be tapering off, Yun said.
Right now is a period of adjustment. People are sensing that home buyers have stepped back a bit, Yun told local real estate agents at a Friday morning meeting.
Home prices in the Dallas-Fort Worth area are up about 5 percent this year — about half the percentage rise of a year ago. And the number of pre owned homes selling is flat, with small declines in many neighborhoods.
Yun said pending home sales activity around the country is down slightly.
We are beginning to sense in our surveys some diminished optimism among potential home buyers, he said.
Pending contracts in recent months have been trending down. Maybe that is partly mortgage-rate related.
Home finance costs are now at the highest level in more than five years, with an average 30-year fixed rate home loan costing about 4.7 percent. The Realtors’ association is anticipating that mortgage rates will be about 1 percentage point higher by late next year, close to 5.5 percent.
Home prices are rising and you combine that with rising mortgage rates, and some people are being priced out, Yun said.
There’s also growing “buyer fatigue” among consumers who have been outbid for homes or can’t qualify for mortgages at higher rates, real estate agents said.
They are frustrated about a lack of inventory, Yun said.
The number of houses for sale in North Texas is growing this year — up 14 percent in September to the highest level in six years. But most of the gain has been in higher priced properties.
The increase in listings is one reason home price increases in the Dallas -Fort Worth area are slowing.
The days of easy 10 percent price gains in one year are over, Yun said.
The Realtors’ association is predicting nationwide home prices will grow by about 8 percent over the next two years.
Texas still has one of the most solid home markets in the country, Yun said.
Look to Texas — they are outpacing the country easily in terms of job growth, he said. That’s why the housing market is much more on a solid base here compared to other parts of the country.
You may see a temporary pause in the market conditions but as long as Dallas continues to create jobs, buyers will be back in the market.
Dallas – Fort Worth in the last five years has created more new jobs than any other major U.S. metro area. In the last year, employment in North Texas has grown by more than 114,000 jobs.
Yun doesn’t anticipate either a recession or a housing bust during the next few years.
Some homeowners are sensing the market is shifting, not that it is going to crash, he said.
While home appreciation is slowing in the D-FW area, there’s no sign of a price decline ahead, said James Gaines, chief economist with the Real Estate Center at Texas A&M University.
The likelihood of a housing bust is extremely low, Gaines said. Yes, the pricing has gotten out of whack.
But housing here is still much less costly than in other major metropolitan areas in the U.S.
Gaines said he is forecasting a flat market for home sales in D-FW this year, after several years of record sales increases.
You are still selling more houses than ever before, he said. It is slowing down a little bit.
Author: Steve Brown
Source – Dallas News
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