The Spring selling season will have challenges in 2021, but there is reason to be optimistic despite those challenges. Here’s why.
The Dallas Fort Worth residential real estate market is starting 2022 with a roaring start. While not quite as frenzied as in the Fall, home sales are still brisk and home values continue to rise. In its January 28 edition, the Dallas Morning News headlined their quarterly update “Market Still Hot, Hot, Hot.”
As I look ahead to the Spring Selling and Buying Season, I see signs people will approach home sales this year with more urgency than in the past four or five. There are two primary reasons for this urgency: 1. the market remains hot with higher home values and lower inventories; and 2. Interest rates are going to go up.
As the Dallas Morning News article pointed out, the residential real estate market remains hot. Prices continue to rise, although economists at the Dallas Federal Reserve Bank think the rise will be slower than last year. One of the mitigating factors is home costs have risen to the point some people are being priced out of the chance at a home. Inventory remains low compared to historical levels. According to the North Texas Real Estate Information System, the MLS for the DFW area, we ended December with less than one month’s supply of homes! A “balanced market” is a six month supply of homes!
The second reason people are worried about buying and selling more this year than the last few is that interest rates really are going up. Yes, I know, mortgage companies have been advertising “Act now, rates are going up” almost continuously since 2012. Rates go up a few basis points, then return to about 3% after several months. It has been that way for the past decade.
Today, it is different. Everyone has experienced inflation first hand during the last year. Go to the “dollar store” and you will find most items priced at $1.50. The Wall Street Journal reports inflation during 2021 was over 7% for the year. Inflation is the highest it has been since 1982!
The Federal Reserve has two main jobs, control inflation and work toward full employment. High inflation hurts on both counts. The Chairman of the Federal Reserve has made it clear the Fed will be raising interest rates. The increases could be coming as soon as March! Anyone wanting to take advantage of the current, still historically low interest rates needs to act now.
There is a reason for some optimism though. Below is a chart showing the New Listings – homes just listed for sale – on the total MLS in Dallas Fort Worth area over the last five years. If you look, most years have a pattern. The only one that doesn’t is Covid 2020 and the beginning of 2021 before the vaccines became available. In all five years, the lowest number of listings occurred in December. In all five years, by March the number of listings was climbing quickly. And the peak was in May, June or July in all five years. Even with all that is happening, there is no reason to believe the basic pattern of a low in December, a rapid climb in the spring and a peak in May, June or July is going to happen in 2022.
If you want to explore selling and buying this year, now is the time to start planning. I have a Seller’s Guide that is 21 pages of information for anyone thinking of selling in the next twelve months. Click here to get the guide.
McKee Smith, REALTOR®, has been helping people like you sell and buy homes in the DFW area for many years. He is very knowledgeable about the housing market in Dallas and Fort Worth. He works out of his home in Coppell, Texas. He is a Senior Real Estate Specialist® (SRES®) and new home construction buyer representation certified. Remember – McKee has the keys to selling your home!