Demand for homes has declined as the economic conditions drive down people’s buying power, cooling down the DFW real estate market.
As the Federal Reserve continues to hike interest rates in response to rising inflation, people looking to sell their homes enter a much cooler market than the previous year. The average rate for a 30-year mortgage hovers at 5.59%, down from last week’s 5.76% — nearly the highest rate since 2008.
According to real estate company Redfin, concerns about the economy and skyrocketing costs have driven almost 15% of buyers to back out of or cancel their contracts.
Overall, the current market shift is “definitely the most change we’ve seen in the other direction since the pandemic started,” according to Shelby Kimball, former president of the Greater Fort Worth Association of Realtors.
Dallas area realtor for Briggs Freeman Sotheby’s, Lisa King, suggested that buyers are “worried about their jobs.”
“They’re worried about a recession. They’re worried about their company going under, or they’re worried about layoffs,” she said. “We’ve been living in this uncertain world for two years. Now buyers are kind of going, ‘Uh oh, is this the time to buy?'”
However, despite these worries, real estate firms continue to project increasing median home prices, with Zillow noting that “the typical home value for the Dallas-Fort Worth area rose by a whopping 29.3% in the past 12 months, and their forecast is that it will rise by 21.7% by May 2023.”
Local real estate leader Cliff Freeman noted the overall effect the economy has had upon buyers, explaining, “What’s happened in the last seven months is that we have seen people who were buying houses at $300,000 now only able to afford homes that are 20% less. Some down to $240,000.”
As the cost of living continues to increase, many potential home buyers are being priced out of the market.
“Given the fact that home ownership creates so much wealth and opportunity … it worries me that so many are being left behind,” said Phil Crone, executive officer of the Dallas Builders Association.