The busy spring buying season is officially here, but it never hurts to look a few months into the future based on current real estate trends. Home owners that have not yet entered the market, or are weighing their options, can anticipate another hot summer in more ways than one. Several trends are predicted to carry the high momentum of North Texas real estate, even as the rest of the country cools down from a strong two-year showing.
House Sales Begin to Level in Most Places Except the Southwest Market
People anxiously waiting for the waters to clear after the 2008 crisis, began to dive in headfirst in the past several years. Consumer confidence was lifted thanks to declining unemployment and bright economic prospects ahead. People busted open their piggy banks and began buying up homes in 2013 and 2014 at a quickly-gaining rate.
That aggressive buying frenzy is set to calm down — at least in most markets. One telling sign is that investors are exiting the scene. A glut of foreclosures and vacant properties in 2009-2012 meant that buying low and selling high was an excellent way to make some dough. Now, that activity is calming down for residential real estate investors. Whereas 19 percent of home sales in October 2013 were from investors, that number declined to 15 percent in October 2014.
Yet, the Dallas / Ft. Worth real estate market seems immune to this tendency. The Metroplex’ attractive tax prospects have seen a growing economy and the population that comes with it. Commercial developments, apartment complexes and residential communities are all still seeing heavy investment.
The upward trend in North Texas residential sales activity and prices will continue to increase as a result, albeit maybe at a slightly lower rate than the dramatic increases seen in the past three years.
Real Estate Mortgage Rates Rise, But Credit Remains Available
Renewed confidence from both bearish investors emerging from their metaphorical caves and cautious consumers alike means that the US Federal Reserve may finally ease up on their rock-bottom interest rate policy. While the operative word is “may,” lenders could nonetheless feel keener to nudge interest rates up just a little.
Considering that mortgage rates and other financing offerings have been at historic lows, this slight increase should come as no surprise. Yet, it will spook people holding out on major purchases to act quickly. This spurred buying will make competition even fiercer in the luxury home market. Expect heavy-hitting bidding wars to occur in high-demand luxury areas like Flower Mound.
For the average consumer, an increase of a few points does not mean that loans will be harder to come by. On the contrary, the Mortgage Bankers Association’s credit availability index has increased by several percentage points in the last several months. For the layman, this increase means a higher likelihood of approval for a mortgage.
Rents Rise Quicker Than Home Values, Encouraging Millennials to Buy
Thousands of millennials graduated at an inopportune time between 2007 and 2009. A tepid job market and tumultuous housing situation spooked them into choosing to rent or move back home. Some analysts were worried that millennials just may opt to rent for the rest of their lives.
Reality set in, though, when the rental market was overtaken by major projects backed by investor dollars. These high-value projects sought quick returns with rents hovering well above the $900-$1,500 a month range. Many consumers, especially recent graduates, have found steady work and are coming to grips with the reality of the rental market. Even as mortgage rates threaten to uptick, many young people are investing in homes to gain equity as opposed to headaches from dealing with dicey property management companies.
All in all, the summer of 2015 should see few surprises. People searching North Texas homes for sale should be prepared for a fight, but by and large the competition should ease as inventory catches up with demand in time for spring of next year.
To help add inventory to this highly-active market while people are still extremely eager to buy, consider enlisting The Rhodes Team. Our expert real estate agents can help find the perfect buyer for your home. Get connected with one of our experienced real estate agents and receive a free home value analysis by filling our the form below.