Change is in the air in the Tarrant County home-buying market.
“It’s been quite a change,” said Shelby Kimball, a broker at Kimball Real Estate.
He says he first noticed it in July.
“That’s kind of when I felt it myself,” he said. “Just seeing the days on market go up, and the slowdown in people looking. The buyers just seemed to really pull back then.”
In October 2021, the median sales prices of homes had rocketed up 21.6% year over year, and there was a scant 1.1 month of inventory in Fort Worth.
Now? This October’s numbers show an 11% increase over the same month in 2021, and there are now 2.3 months of housing inventory available.
Kimball and others in the residential real estate business point to the tightening of monetary policy by the Federal Reserve in a push to slow inflation. That resulted in a corresponding increase in mortgage rates which increased from about 3% to over 7%.
Earlier this year, many potential Dallas-Fort Worth home buyers were competing with all-cash offers of winning bidding wars. Many buyers simply gave up as rising home prices and the competitive market put homes out of reach, Kimball said.
Now some buyers are returning, he said.
“With rates kind of stabilizing, I do think we’re starting to see some buyers start to come back,” he said.
Inventory in Fort Worth grew to 2.3 months in October, which is still several months away from the 6.5 months that the Texas Real Estate Research Center at Texas A&M University cites as a market where supply and demand is balanced. Still, the current inventory is 1.7 months more than the historic low seen earlier this year in February 2022, when Fort Worth inventory was at 0.6 months.
“We’re starting to have some open houses now, too, which we just didn’t have earlier this year,” said Kimball.
“Believe it or not, we do still appear to be in a sellers’ market, meaning that demand leaves little inventory available,” she said. “It feels like the market is holding its breath, waiting to see what happens next. If inventory continues to grow and the demand drops, then we could head into a buyers’ market. But we’re not there yet.”
Aaron Cole, a 34-year-old teacher who was hired for a new job with the Mansfield Independent School District, didn’t have much choice.
“We needed a place to live here, moving from east Texas,” he said.
They found several homes they liked but ended up buying one of the first homes they looked at.
“It was still available after three or four weeks, but there was nothing wrong with it, so we went with it,” he said.
Kimball, who represented the Coles in their search, said there is more inventory available than earlier in the year.
“There are still some places, some great locations, where prices are still increasing, but if you’re willing to look or make some compromises, you’re likely to find something,” he said.
The average number of days on the market for Tarrant County grew to 35 days, which is still significantly lower than the national average of 51 days, according to the Texas Real Estate Research Center at Texas A&M University.
Mortgage rates peaked around 7% and now they are in the 6% range, he said. That is also impacting the market, he said.
The 15-year fixed mortgage is 5.67% and the 30-year fixed mortgage is 6.33% as of Dec. 9, according to data from Freddie Mac via the Federal Reserve of St. Louis.
“Buyers can get their mind around 6%, more than 7%, for some reason,” Kimball said.
With rates stabilizing near 6%, some buyers are coming back, Kimball said.
Mason Whitehead, home loan specialist at Churchill Mortgage, is seeing the same phenomenon.
“We are at a point where buyers that were sitting on the fence are rushing to snag homes at prices much lower than what was available just a few short months ago,” he said. “Agents are advising their clients to purchase homes now while the prices are lower, because while interest rates are higher, you can always refinance down the road the next time rates trend the other direction.”
In addition many mortgage companies are offering deals on mortgage rates to get buyers back into the market.
Churchill Mortgage, for instance, is offering to lock in a rate for 90 days as a buyer looks for a home.
“That way, if rates go up, the buyer is insulated from that and that can make their budgeting for a home much easier,” said Whitehead.
Some companies are also offering a 2-1 buydown mortgage that provides a low interest rate for the first year of the loan and a slightly higher rate for the second year. The full rate then kicks in for the third and later years.
The expectation is that by the time the full rate kicks in, owners can refinance, Whitehead said.
That is what the Coles did.
“We did the 2-1 buydown so that helped us in getting the home we wanted,” Cole said.
Locally and nationally, homebuyers are re-evaluating their options, said Danielle Hale, realtor.com’s chief economist.
“The key to making a good decision in this challenging housing market is to be laser focused on what you need now and in the years ahead, so that you can stay in your home long enough that buying is a sound financial decision,” she said.
Kimball is glad to see the market return to some form of normal.
“There’s not 50 offers on the same house these days,” he said. “So it’s a much more enjoyable, what I call normal, process again,” he said.
Bob Francis is business editor for the Fort Worth Report. Contact him at firstname.lastname@example.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.