Home Prices in DFW Continue to Inch Higher
It seems each month brings the same theme with Dallas/Fort Worth home prices.
Per the Case-Shiller Home Index for Dallas/Fort Worth, home prices in the metroplex were up a scant 0.85% year-over-year in October. This is the smallest increase since September 2023. Nationally, prices were up 3.6%. Amongst the 20 U.S. metro areas that Case-Shiller tracks, DFW was third lowest. Only Tampa and Denver had lower year-over-year returns in October.
Home Prices Stable
Although prices were barely higher year-over-year in DFW, they were stable, and this is good. Looking at the graph above, you can see that 2024 looks almost identical to 2023 in terms of the price curve, with 2024 prices being slightly higher than 2023 prices.
For those of you trying to sell your home right now, you may find that you aren't getting the same kinds of offers that sellers of similar homes received a few months ago. Prices in DFW were -1.63% lower in October compared with the previous three months, and they were -0.54% lower month-over-month. Again, you can see this from the dip on the far right side of the graph.
Why are home prices barely budging right now? In short, it is indicative of the fact that supply and demand remain equalized. Per DFW MLS records, months supply was 4.6 in October. As with August and September, this reading is the highest in nearly 10 years. A months supply of 6.0 is generally considered to be an exact balance between buyers and sellers. The fact that we are still a little lower than 6.0 demonstrates that we have a market that slightly favors sellers.
Mortgage Rates Were Elevated in October
Of course, one of the largest factors that impacts housing demand is mortgage rates. At the end of October, the 30-year rate stood at 6.72% nationally according to Freddie Mac. With rates remaining elevated, many would-be-buyers are staying put. Combined with the high cost of insurance and property taxes, mortgage rates are simply making monthly payments too high for many.
Conclusion
As long as mortgage rates remain near 7% (or higher) and insurance and taxes also remain high, I think we can expect DFW home prices to continue to move slightly higher on a year-over-year basis with some month-over-month declines sprinkled in, especially in the winter months. I see no signs that insurance rates will come down. There is talk that in the upcoming legislative session we may receive another property tax break, but unless it's significant, it likely won't impact homeowners' monthly payments much.
Mortgage rates are always the wild card. For the last two years I have heard numerous people (including professional economists) predict that mortgage rates would come back down to the 5% range. This simply has not happened. We briefly got close to 6% in September, but rates have only risen since.
When the Federal Reserve lowered interest rates recently to 4.25%-4.5%, many people thought mortgage rates would follow, but as I've pointed out previously, mortgage rates do not necessarily follow the Fed's moves directly. Instead, they are more closely tied to the 10-year treasury rate, which has continued to rise as bond prices have declined this year.
What does this mean for you?
If you are an investor, and you have cash, this could be a great time to buy. Rental rates remain high as well, so investing in a rental property using cash makes quite a bit of sense right now. You won't hit a grand slam with property values, but if you hold the property for 10 years or so, you should come out quite nicely.
If you are in the market to buy a home for yourself to live in, you still have plenty of options. Sellers will tend to be more willing to work with you now, so you can confidently ask for concessions.
If you are a seller, you also still have options, but you don't have quite as many as you would have had a couple of years ago. You need to be patient and be prepared to lower your asking price if your home isn't receiving any offers. You also have to realize that in this market, homes sell for more during the summer than they do during the winter. So, if you are thinking of listing your home in January, expect that it probably won't sell for the same price it might have last June.