Home sales were down 13 percent in Frisco TX, the popular suburban Dallas community which is also home to the Dallas Cowboys. Pending sales during the month of October were even worse, falling 16 percent from the same time a year ago. The number of homes for sale in this   in this sports-minded community rose 6.2%. There are over a 1000 homes for sale in Frisco currently, but they aren’t selling like they used to. Frisco’s real estate problem is the same one plaguing the North Texas market in general. Prices are simply too high, and artificially high.

The average price of a home sold in Frisco TX during the month of October was over $457,000, up 5% from last year. Frisco, like other DFW area communities, has been riding the wave of the DFW real estate boom since 2012 atop the Fed’s balance sheet distortions. Like all Dallas area communities that saw home prices artificially inflated by egregiously bad Federal Reserve monetary policy, Frisco Texas real estate is starting to deflate. New home prices in Frisco TX are getting some big price reductions as homebuilders ratchet up the incentives to push expensive Frisco inventory to reluctant buyers. It doesn’t mean these discounted new home prices are cheap. Not by a long shot.

While some Realtors in Frisco are apparently willing take freebie vacations as their clients buy expensive new homes, the prospect of catching a falling knife is looking increasingly likely. The North Texas real estate market is getting a wake-up call in the form of higher mortgage interest rates, and as long as the Fed tries to correct the huge imbalances/distortions they created, you can expect that mean reversion to continue. This is not rocket science. It’s simple supply and demand. A “recovery” built atop a massive pile of debt is neither real or sustainable. Many Realtors, and certainly the local business media, seem to be willing to overlook the glaringly obvious. That won’t change the inevitable outcome.

Right now the new home market in Frisco is raising a red flag on prices. Builders have to sell something unless they want to go out of business. The show must go on. Pretty soon the resale market for Frisco TX homes will also follow suit. Closed sales of existing Frisco homes collapsed 27 percent in October as pending sales of preowned homes dived 30 percent. This was the second consecutive month where existing home sales in Frisco took a swan dive. The big drop in October home sales follows a 24 percent decline in September. This is not surprising for someone like myself who follows market cycles.

Frisco has a fairly affluent suburban population demographic. I can only assume many Frisco TX families are already being affected by the “paper wealth” destruction in the markets that will continue eroding their consumer confidence. While many of these people were busy worrying about whether their favorite team won the latest meaningless game, Mr. Market has been preparing a bountiful harvest of consequences for those whose priorities are a bit out of touch. This is why high end real estate in Dallas Fort Worth could get crushed in the coming downturn.

I’m sure most of the Realtors in Frisco are hoping and praying that this time will be different as they prod reluctant buyers to buy some of these heavily discounted, yet still expensive homes. Unfortunately hope is a very poor tactic.