North Texas' Real Estate Frenzy Appears To Be About Over, Experts Say
FORT WORTH (CBSDFW.COM) - This past year's wild and unprecedented race for real estate in North Texas is finally over according to experts in the field.
Historical value growth, highlighted by more demand than supply in DFW, caused a frenzy where buyers found themselves over bidding for homes and sellers getting an astronomical amount of offers for their houses.
The combination of low mortgage rates, new Texas residents, and a never before seen low inventory of homes, created a combination for the market to explode, experts said.
Home prices averaged more than $350,000 in DFW for the first time, and property owners were seeing year to year increases in their values of up to 20%.
In addition, sellers with desirable properties were receiving dozens of offers sometime within hours of showings.
Dr. Luis Torres, a research economist from the Texas Real Estate Research Center at Texas A&M said that trend is over.
"Now months of inventory are slowly increasing. Listings are increasing. Days on market are increasing. So, that broad range of indicators are telling you that you've reach a peak of the frenzy and now you are going back down to normal days," said Dr. Torres.
Dr. Torres said 20% value increases year over year aren't sustainable or healthy. Instead, he says 5% is much more manageable. While the DFW market hasn't drop to a 5% margin yet, Dr. Torres says we are headed in that direction.
"I think that was the peak and now you're going to go back. Back to 16, 15, until you go back to 5% annual growth like what we saw before the pandemic," he said.
He said another factor leading to a return to normalcy are mortgage interest rates rising again for borrowers.
At their lowest new borrowers were receiving less than 3% interest rate loans, now those numbers are above 3% and climbing.
"The lower rates we saw that fueled the frenzy are behind us, right? We are going to get into higher mortgage rates going forward," Dr. Torres said.
In summary, experts say wild trends don't last forever.
They remind consumers that laws of economics dictate there is always a return to normal.