Over the past two years, historically low-interest rates and robust demand helped drive Dallas-Fort Worth home prices to record levels. Now, with benchmark 30-year fixed mortgages above 7%, what is the environment looking like for Dallas real estate in 2023?
The median home price in DFW peaked in July this year at $393,000, softening slightly to $390,000 in September. Before the drop, the city experienced rapidly appreciating prices.
Fort Worth, for example, saw home prices skyrocket nearly 50% between August 2020 and May 2022, with the median price climbing from $248,000 to $367,000 during that period.
However, headwinds have continued to accumulate in the housing market in North Texas and across the country. On November 2, the Federal Reserve approved a fourth consecutive interest rate hike of 75 basis points, as reported by The Dallas Express. This marks the central bank’s most aggressive rate tightening since the 1980s.
DFW real estate, like other markets, appears to be feeling the effects of the Fed’s policy. The metropolitan area has seen active property listings increase by 84% over the past year as homes stay on the market longer.
In September, inventory reached two and half months of supply, increasingly favoring buyers who face less competition when bidding on homes. Similarly, as bids reduce, sellers may be forced to lower prices to attract prospective homebuyers. That same month, over one-quarter of homes for sale in DFW reduced their listing price, a 16% increase compared to September 2021.
Shelby Kimball, a realtor and former president of the Greater Fort Worth Association of Realtors, thinks that the heated market which characterized much of the pandemic is decelerating. The receipt of multiple offers far exceeding the asking price “seems to be a thing of the past,” according to Kimball.
In August 2021, the share of offers submitted through Redfin that faced competition stood at 65.6%. One year later in August 2022, that number was down to 41.9%.
The trend points to a slowing housing market, with homes taking longer to sell. In October, the median “time on market” for homes in the DFW was 43 days, up from 35 days one year prior.
Dallas-Fort Worth real estate agents, brokers, and homebuyers alike will be monitoring the fallout from the latest Fed decision on the housing market.