Our market update for the week of March 4-10th shows new inventory, under contract and sold properties all ticking up slightly. New inventory rose week over week by 6.5%, which for Dallas/Fort Worth shows normal signs of a spring market. Buyers will get more homes to choose from, and as we get farther into spring, more competition with the “moderately serious” buyers will drive up showings.
We are not seeing the mass of multiple offers like we did at this time last spring, so this indicates a slight softening versus same time last year. Nothing to be concerned with, this is just to help guide pricing as a seller considers options on list price.
For both sellers and buyers, what we need to pay attention to is creeping interest rates rising. The Fed has been promising for the past 5 years, and here we are. There is a mental barrier for buyers at the 5% interest rate mark, we have a while to go. We have however gone up .59% in 30 year fixed interest rates since January 1st. For every 1/2% in interest rate we go up, that’s 5% more in the total housing price that a buyer will pay in interest over the life of a loan.
So if a home is at 4.1% at a $500,000 home, at the same $500,000 price and 4.59%, the buyer will pay an extra $25,000 in interest over the life of the 30 year loan. It’s important to realize that locking interest rates and buying sooner rather than later will save on interest paid during the life of the loan.
Over time, this means that affordability for a buyer who could purchase a $500,000 home could then turn into a $475,000 purchase price/affordability, thus changing what a Seller could get for their home.