Should I buy? Are we in a bubble? Here are answers about Fort Worth’s housing market
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Interest rates are starting to cool Fort Worth’s hot housing market
Are we in a bubble? When will prices go down? Should I wait? Real estate agents and researchers weigh in on some burning questions about Fort Worth’s housing market.
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Real estate agents agree we’re in one of the most unprecedented housing markets in recent memory.
Demand for housing skyrocketed during the COVID-19 pandemic, and historically low interest rates made it more affordable for people to get loans to finance those purchases.
Now as interest rates rise, it is getting harder to afford the ever decreasing number of homes on the market.
However, agents advise potential buyers to stay the course, saying they work with their clients to find a house that meets their needs.
Are we in a housing bubble?
Long story short, no, but the term bubble is ill-defined, according to Texas A&M researcher David Perdue.
Bubbles are a lot easier to see after they’ve popped, Perdue said. He noted the price increases in North Texas are in line with fundamental market principles, namely supply and demand.
The Federal Reserve Bank of Dallas released a report in March suggesting there could be a nationwide housing bubble brewing. The report looked at the rapid rise of housing prices related to rent and income at the end of 2021 to suggest a bubble is possible.
However, Perdue countered the rapid rise in home prices is entirely attributable to historically low interest rates during the pandemic. People who were already planning to buy homes moved their plans forward to take advantage of the lower rates, Perdue said.
Are prices going to go down anytime soon?
Again, long story short: No.
Real estate agents in Fort Worth agree prices may cool, but won’t decline, and the reason is supply.
The supply of houses is measured by the number of houses listed for sale divided by the number of closed sales in a given month.
This ratio is called “months of supply” meaning it measures how many months it would take to sell all the listed houses.
In a healthy housing market, you want a six month supply of housing, meaning you want six times as many houses actively listed on the market as closed sales in any given month.
Fort Worth has had less than a month supply of housing for six straight months, from November 2021 to April 2022.
That ticked up in May, but Shelby Kimball, a Fort Worth Realtor, said that’s not entirely unexpected as supply tends to be up in the warmer Spring and Summer months.
However, some point to the large number of homes still under construction. Housing developments are popping up in far north Fort Worth near Saginaw, along the U.S. 287 corridor and along Texas 114 by the Texas Motor Speedway.
Some construction has been held up by supply chain problems.
As those homes come on the market, and demand slows from rising interest rates, prices will plateau, but not go down, experts said.
So should I get in now? Or should I wait?
It depends on a number of factors unique to your situation.
If you’re waiting for prices to drop, you’ll be waiting a long time, as both agents and researchers agree it will be a while before the supply of housing stock rises to meet the demand.
However, if you’ve been planning to buy a home, real estate agents said there aren’t a lot of reasons to wait.
The Federal Reserve is expected to continue raising the federal fund rate, which acts as the basis for how much banks can charge for a loan. That means the cost of borrowing will continue to go up as well.
However, interest rates are still historically low despite rising by around two percentage points since the beginning of the year.
In September 2008, the average interest rate for a 30-year fixed rate mortgage was 6.35%. It’s hovering around 5.78% now, which is the highest it’s been in a while, but not the highest it’s been historically.
What does it mean to be ‘flexible’ in this housing market?
Realtors are advising clients to evaluate what’s most important to you in a house.
Shanon Ashkinos, president of the Greater Fort Worth Association of Realtors, advises her clients to make a list of priorities when it comes to finding a home.
“So perhaps people who were thinking that a pool was extremely important to them, are going, ‘Well now we can’t necessarily afford that,’ so we’re looking at different options in terms of their purchasing power,” she said.
Ashkinos always takes her clients to a lender first to get a clear picture of what they can afford. She said this helps her clients get a financial baseline, so they can have a clear picture of what they can afford.
From there, she works with her clients to bridge the gaps between their dream home and what they can afford.
Buying a home is the best way to build wealth, said Kimball, adding that if you’re planning to put down roots in Fort Worth, now is as good a time as any to buy.
Buyers may have to get a smaller house or one that’s farther away from their ideal location, but when you buy a house you build equity as you pay down the mortgage and the property increases in value, Kimball said.
This will help buyers get into that dream home in the long run, as they’ll be able to take that equity to get their preferred house when it eventually become available.
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