Texas Housing Market. Following years of rather sharp rises in terms of home prices, as well as increases in competition to purchase a home during the COVID-19 pandemic, the housing market in the state of Texas now appears to be cooling down.
Up until recently, home buyers who had been competing for a more limited supply of homes were forced to routinely pay more than what the asking price was, as well as make offers right then and there. Now, however, more homes for sale in Texas are popping up than they had been during the fall of 2020, which is the period of time in which the housing crunch in the state caused by the pandemic started in earnest.
According to data from the Texas Real Estate Research Center at Texas A&M University, Texas home sales decreased by more than 5% from April to June as opposed to the same period the previous year. Similar drops were also observed in areas such as Houston, San Antonio, and the Dallas-Fort Worth area. In the city of Austin, however, home sales fell even sharply, falling by a surprising 12%.
Following a total of two years of a market that was essentially red-hot, there are now many sellers who have had to cut prices in order to try and lure in more buyers who are experiencing issues such as increased home prices, inflation, and increased mortgage rates. This is a surefire sign that buyers are now beginning to gain more of an edge, according to real estate experts.
According to one Fort Worth-based real estate agent:
“It’s still a sellers market. But certainly we’re seeing buyers be able to have a little bit more choice. And that’s such a good thing.”
This statement indicates more of a marked shift from the height of the pandemic, when historically lower mortgage rates and employees transitioning to working remotely from home drove all kinds of buyers to begin snatching up homes quickly enough to cause the state’s supply to decrease, as well as cause home prices to increase an average of approximately 28% between the beginning of the pandemic and the end of 2021.
Since the Federal Reserve made the decision to increase interest rates this past spring in an attempt to slow down inflation, which in turn caused an increase in mortgage rates, the trend has reversed throughout Texas. This past July, a total of 55,668 homes were listed for sale, and one year later, this number increased more than 50% to a total of 83,513. Areas such as El Paso, San Antonio, Dallas-Fort Worth, and Houston all experienced a growth of double-digits last month in terms of home listings, as well as a corresponding decrease in the total number of homes that were sold. Each metro area also experienced a fewer amount of home sales within the first seven months this year as opposed to the same period during the previous year. In the city of Austin, the drop-off has been especially significant. The housing market there, which was already great during the pandemic, peaked in the month of May when the median price for homes reached $550,000 as opposed to January 2020’s total of $305,000. Overall demand in Austin, however, has since tapered off, as the total number of houses for sale reached a total of 8,709 in the month of July, which is an astonishing 168% increase from the 3,521 that were listed in July 2021.
Throughout the past three months, the median price of a home in Texas has essentially flattened, hitting approximately between $350,000 and $360,000, which is an all-time high for the state. Real estate experts also state that, barring a recession, home prices aren’t expected to decrease anytime soon due to the fact that the state is still gaining thousands of residents, as well as seeing more growth in the job market.
In the meantime, builders in various areas of Texas decided to cease some construction of new single-family homes after two years when construction itself surged. Additionally, building permits for these same homes across the state decreased by double digits in July as opposed to July 2021. Furthermore, builders in Dallas-Fort Worth, San Antonio, and Austin ended up filing for a fewer amount of permits during the first seven months of this year as opposed to the same exact period last year. It’s also important to note that the overall cost of building a home has increased throughout this year, thereby decreasing the number of permits.
Texas Housing Market. Since the housing market now appears to be cooling off, experts believe that this will provide some much-needed relief to renters as well. Average rent increases are also expected to drop from the double digit growth that was more prevalent during the first two years of the pandemic, yet at the same time, remain higher than the typical increases that were seen prior to the onset of the pandemic. Even though a slowdown is obvious, those renters who wish to own a home will end up having to pay more than they would have had to prior to the pandemic. For a first-time buyer, a typical entry-level home, which can cost upwards of $200,000, are becoming more difficult to find, and the overall share of newer homes within that same price range is decreasing every year as the cost to build a new home increases.