The average DFW home down payment is now $40,000
With home prices soaring, buyers must spend more up front to put a roof over their heads. Dallas-Fort Worth-area homebuyers on average are forking over almost $40,000 in down payments when they purchase a property, according to a study by LendingTree. That's an all-time high, but D-FW down payments are less than the $46,283 nationwide average in the 50 largest metro areas. "While there are signs that the housing market is beginning to cool somewhat, home prices are still significantly higher in many parts of the U.S. than they were before the coronavirus pandemic," LendingTree's Jacob Channel said in the report. "One of the side effects of these higher home prices is higher down payments." "If you are a first-time homebuyer, that means the nest egg you need to save up is basically 16% larger than it was a year ago because home prices have gone up," said Frank Nothaft, CoreLogic's chief economist. "The first-time homebuyers are having sticker shock right now. "That's why we are seeing in some of the latest statistics maybe there's a bit of a slowdown in homebuying toward the end of the summer."
Dallas Morning News, September 8, 2021
The declines in D-FW home sales and slower price appreciation are having a bigger impact on consumers' attitudes than their pocketbooks, analysts said. "I am more concerned about the psychological impact of not-so-rosy housing news than I am about the actual underlying fundamentals of the housing market in the Dallas-Fort Worth market," said Daren Blomquist, top economist with Attom Data Solutions. "Certainly the data shows that the market has gotten somewhat overheated and is due for a slowdown, but that slowdown should just be a chance for the market to catch its breath rather than a trigger a panic attack. "Jobs and people are still moving to the Dallas-Fort Worth area in large numbers, which ultimately should keep demand for housing solid," Blomquist said. "But the psychology of the market is more of a wild card and could result in a bigger slowdown or correction."
North Texas home sales would be higher if there were more moderately priced properties up for grabs, Paige Shipp of housing analyst Metrostudy Inc. said. "I believe the 1 percent decrease in sales this year is due to the lack of homes on the market below $200,000, not a lack of buyers," Shipp said. "D-FW has strong job and population growth, which equates to demand for homes. "However, the increasing interest rates have exposed the fact that D-FW buyers cannot all afford homes priced above $400,000, she said.
Homebuyers are getting a double whammy. "Home prices are up and mortgage rates are up," said Frank Nothaft, chief economist with CoreLogic. Nationwide home prices are almost 7 percent higher than a year ago. And the average long-term mortgage cost has risen by seven tenths of a percentage point interest compared with this time in 2017, according to CoreLogic. "That translates into a 16 percent increase in the monthly principal and interest payments to buy the same house," Nothaft said. For the first-time homebuyer there is a 19 percent increase from one year ago. "Average wages around the country are up only 2.5 percent to 3 percent from a year ago. Each passing month as prices rise and mortgage rates rise, it's increasingly challenging for home buyers, especially entry-level homebuyers," he said. "The pinch it takes out of their monthly budget starts to affect more and more buyers across the country." Dallas-Fort Worth is one of the markets with record-high home costs. While overall median home prices in North Texas are up about 5 percent so far in 2018, prices for the most affordable houses — under $200,000 — are rising at almost twice that rate. CoreLogic is forecasting further increases in home prices and interest rates in the year ahead.
Robson Ranch by Robson Community Builders
Homebuilders are betting that boomers will be among the biggest buyers of new homes in the next few years. And North Texas residential communities are gearing up for the coming gray wave of residents with new neighborhoods aimed at the 55-plus crowd. These older buyers tend to have higher incomes and are more interested in a new house compared with young, first time homebuyers.
Numerous developments in the region have recently announced 55-Plus neighborhoods inside their master-planned communities. Viridian in Arlington has announced a 500-home section for 55-Plus. Union Park north of Frisco has also just announced a 55-Plus section in their development. While previous generations of aging buyers often headed to separate senior communities, the tide has turned in thought. Fewer boomer buyers want to relocate to a segregated seniors-only community in the far off 'burbs, said Dallas housing analyst Ted Wilson of residential Strategies. "There has been a complete rethinking on how to approach these buyers," Wilson said. "It used to be golf courses and millions of dollars for amenity centers. Now it's about being close to the grandkids and being part of a bigger community." With the aging U.S. population, the building industry is banking on thousands of 55-plus buyers in the next decade. The industry index of potential buyers from this demographic is at an all-time high, according to the National Association of Home Builders. Boomers already make up about a third of U.S. homebuyers. And 38 percent of all homebuyers last year were 55 or older, according to the National Association of Realtors. Wilson said a quarter of the D-FW area's population is 50 or older, and this pool of homebuyers will swell by 188,000 in the next five years. "There are amazing stats on the growth of active adults," said Wilson.
Sold February 2018, $2 Million, 848 Sq Ft, $2,358 per Sq Ft, Sold $550,000 over List Price
Houses in Sunnyvale, California, are selling for record multi-million dollar prices due to their proximity to Silicon Valley jobs, according to a report. The latest is a 848 square foot house sold in two days for $2 million. A "small, unassuming home in the Cherry Chase neighborhood," of Sunnyvale, California, which has two bedrooms, a total of 648 square feet in living space, and was described as "nothing particularly breathtaking," sold for $2 million recently, despite the fact that the asking price was $550,000 less. "It sold for the highest square-foot price recorded in Sunnyvale — a stunning $2,358, according to MLSListings, which tracks homes sales going back to 2000," reported Mercury News, who claimed that the "jaw-dropping price tag suggests Sunnyvale, which has traditionally been less expensive than neighboring cities Cupertino or Palo Alto, is becoming a real estate destination in itself." According to the report, the average house in Sunnyvale now sells for 28 percent over its listed price.
Real estate experts agree that inventory challenges will likely persist into the new year. Currently, overall inventory for existing single-family homes and multifamily homes stands at 1.67 million, according to November data provided by the National Association of Realtors.
"We have gone 29 months seeing overall inventory decline on a yearly basis, and that's had a long-lasting effect on the market," said Javier Vivas, director of economic research at Realtor.com. "That should keep the total number of homes for sale constricted for the good part of next year. However, based on movement we detected this year, we also expect those inventory declines to decelerate slowly throughout next year, and overall inventory could stop shrinking as early as fall 2018. Growth in new construction will be key for that recovery." Svenja Gudell, chief economist at Zillow, said that, today, there are 12 percent fewer homes for buyers to choose from then there were just three years ago, and that, as of October, more than half of U.S. homes for sale were in the top one-third of home values. In other words, pricey.
"Inventory will remain a major concern in 2018, continuing to play a significant role in pushing up prices," said Gudell, who predicted it will remain a seller's market in the new year. "It will create particularly strong headwinds for first-time homebuyers, who don't have the benefit of profits from a prior home sale to boost their down payment and make them more competitive."