Denton County home sales are drying up as fast as the inventory. Closings in Denton County fell 7 percent last month. Pending sales were just slightly lower compared to the same time a year ago. The problem continues to be sky high prices and super low inventory. The median price of a home in Denton County hit a record high $415,000 last month. Average home prices fell slightly to $477,978, but they are still 21.5 percent higher than the same time a year ago. The number of homes for sale fell for a 4th consecutive month.
I was fortunate enough to help a few sellers cash in on this crazy market during the past month, so I can vouch for the crazy prices some homes are still fetching. Shopping with buyers just confirms that the local real estate market is still overbaked. Typical year-end demand has coincided with an extremely juiced market where the Fed still has their foot on the gas peddle despite raging inflation.
Zooming out, the broader North Texas real estate market is still searching for direction on the verge of a Fed policy tilt. Home sales leveled off in the Dallas-Fort Worth area last month while pending contracts for homes edged four percent higher. Months of inventory dipped to 1.2. Denton County has 0.8 months by comparison. Price appreciation in North Texas has cooled, but not by much. The median price of a DFW home was 17.5 percent more expensive than November 2020.
The CPI print for November confirmed just about everything is expensive. The official government reading of a 6.8 percent rise in prices over the latest 12-month period only begins to grasp the picture of what is taking place. With owners equivalent rent (OER) being one of the largest components of official inflation, it is worth noting that OER has yet to capture the recent insanity in the housing market. The disconnect between reality and the status quo narrative is a sight to behold.
Next week’s FOMC meeting will take place under the backdrop of some of the most reckless monetary policy oversight in U.S. history. Powell still has rates at the floor with prices shooting to the moon.
As long as you don’t need housing, transportation or energy official inflation is only 6.8 percent. If you are like most normal people, you have the luxury of watching the government try to steal one out of every 14 dollars you are earning. That’s on top of the taxes you get to pay for the luxury of living in this unhinged economic landscape while billionaires stash their wealth in various schemes and tax havens to avoid paying any taxes at all in many cases.
It should come as no surprise that more workers are job hopping. Unionization of labor is also becoming a thing again. The government and the Fed continue destroy the purchasing power of the dollar, so they have to do something to survive. The Covid pandemic laid bare the parasitic relationship between corporate America and labor. Labor is revolting, and it looks like that party is just getting started.
The Federal Reserve’s answer thus far continues to be more of the same asset levitation.
For what it’s worth, the local real estate market is reminding more and more of 2018. The Fed has another tiger by the tail, and there are no good options on the table which will leave all market participants unscathed. The Fed has been floating all manner of speculative malinvestment during the Covid pandemic, and the plumber is probably going to get dirty when he opens up the cleanout.
Real mortgage rates (adjusted for inflation) are actually in negative territory. The problem, as history reminds us, is that these bubble-level asset prices are still subject to the laws of gravity. That which is not sustainable will eventually end. The challenge is being patient enough to navigate this warped, flipped, manipulated real estate market heading into next year.
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