Denton County home sellers are experiencing a different real estate market in 2019. It’s the type of market some people probably remember, but one they haven’t experienced for a number of years as the Federal Reserve and other global banks jawboned markets higher and fueled a speculative frenzy in global real estate. Average days on market continued to rise in February. Even though sales activity rebounded a bit last month, the Denton County housing market correction that started during the last half of 2018 is still taking shape.
While many housing pundits and professional economists are expecting a quick rebound to “normal”, the data still points to continued stagnation for the Dallas-Fort Worth real estate sector. The Fed has managed to provide a temporary respite from the December wake-up call, but homes are still expensive and mortgage interest rates are still north of 4 percent. Home buyers are still looking for value and affordability, and many sellers are still looking to unload properties at peak prices. In Laymans terms there is a tug-of-war occurring between buyers and sellers.
This market mismatch between what is currently for sale and what buyers are willing/able to pay is a primary reason why the average days on market continue to creep higher in the DFW area. Available home inventory is 40 to 50 percent higher than what we saw at this time last year in many Dallas-Fort Worth submarkets. Current NTREIS stats show that the number of homes for sale in Denton County (nearly 3600) is 38 percent higher than February of last year. Months of supply for Denton County are 50 percent higher than last year.
Average days on market to sell a home in Denton County stood at 64 days in February, virtually unchanged from the month prior. Yes sales activity has improved during Feburary, but not enough to reverse the correction in the market. Days on market for the entire DFW area rose to 59 days in February. You’d have to go back to 2015 to see similar numbers, but it is quite likely those days on market could increase further. People forget that we are still in the later states of a larger business cycle, and employment is still robust in the DFW area…for the time being. We haven’t even seen the actual turn in the broader economy yet. When that turn arrives it could easily take 3 or more months to sell a Denton County home rather than the two months on average that we are currently experiencing. What the Federal Reserve does at that point is anyone’s guess.
What we do know is that the Fed has fewer tools available at its disposal to combat the next recession. That’s because they have spent the better part of a decade attempting to prevent the completion of the market cycle and the last housing bust. The Fed Funds rate is only at 2.5 percent, so there is little the Fed can do beyond taking rates back to zero and going full Japan mode.
Denial is a long river, one that many home sellers, Realtors and real estate brokers often frequent when it suits their purposes. This NYC real estate broker is a perfect example of the willful ignorance that is still pervasive in the real estate market. Even in the face of overwhelming evidence to the contrary, this broker has the audacity to go on national television and falsely claim that stagnant home sales are due to a lack of inventory.
If you are a prospective Denton County home seller, it’s time to get real, assuming you actually want to make it to the closing table. Knowing what you are selling and having realistic expectations are more important than ever. At the same time, you should avoid Realtors making lofty promises or those promising a return to “normal” market conditions. Work with a professional broker who will treat you fairly and offer objective, independent advice.
As I noted in a previous column for the local paper, this is not your father’s housing market. Anytime you hear a supposed expert referencing the term”normal”, tread with caution.