Denton County home prices finished out the year right where they started. A strong start to 2023 saw prices and sales activity continue to move higher into the summer. That’s when the Denton County housing market essentially stalled out. A subsequent rise in mortgage rates to the eight percent mark brought a double-dip in the market and another round of softness. The Yellen pump and the Powell pivot helped to lower rates slightly over the last two months of the year and prevent the market from sliding further.
The official stats for Denton County in December show the median sales price up 2.9 percent year-over-year. Average prices were 5 percent higher. That’s if you include all property types and sizes. We finished out 2023 at 2.2 months of supply. Average days on market rose slightly to 54 days. Percent of original list price slid to 94.5 percent for December, continuing a six-month downtrend. Closed sales in Denton County were 15 percent lower year-over-year, while pending contracts ticked up by 4.5 percent.
Here’s where things get more interesting. While the official stats (the ones regurgitated by typical media and industry pundits) show a slight rise in home prices, the reality shows there was zero “home” price appreciation in 2023 in Denton County. Let me explain. Median price per square foot came in at $200 for the month of December in Denton County. That’s exactly 1 percent less than the previous year. Average price per square foot for a Denton County home rose less than 1 percent year-over-year ($208 to $209) in December.
Looking at typical single-family homes, those between 1500-3500 square feet, shows prices were actually year-over-year negative in Tarrant, Collin and Denton counties for 2023.
- Tarrant: -1.4%
- Collin: -2.0%
- Denton: -0.1%
Here’s the chart showing real home prices in Denton County which were essentially flat in 2023.
Remember these numbers when the Denton Central Appraisal District starts turning the screws on homeowners again in 2024 with higher assessments and “appraisals”. They will be busy again handing out $billions in land value reductions so recreational “ranchers” and “farmers” pay little to nothing in property tax on some of the most valuable property in the area while typical homeowners make up for the difference in lost tax revenue via higher assessments.
The actual homes that people need in Denton County saw little to no price appreciation in 2023. The slight increase in official home prices can be chalked up to rising land values. 2023 saw a continuation of the financialization in the housing market. Sales of more expensive luxury homes and estates with acreage helped to prop up the official home price statistics. Behind the surface, the “housing” market was basically flat as buyers struggled with elevated prices and higher mortgage interest rates.
New home builders took advantage of the market pump in November and December to sell of some additional inventory. That’s a big reason why official inventory levels took a dip in December. A number of existing home sellers also pulled their listings at the end of the year when they didn’t sell. New listings were essentially flat in December, rising just 3.3 percent year-over-year. We’ll get a better read on inventory come February and March when seasonal activity normally picks up again.
Rising Costs Hitting Owners and Home Buyers in 2024
If you checked recent renewals on your insurance policies, you may have experienced some sticker shock. Insurance carriers have been jacking up premiums across the board in North Texas, all over the country actually. Auto and homeowners insurance are starting to look like luxury items in many markets. California and Florida have been hit with huge price increases. Some carriers have abandoned markets entirely to avoid losses and pad their profits. It’s a good thing Krugman told us inflation had finally been defeated, and at little cost. LOL!
Home buyers are also going to see some stealth increases when they get to the closing table this year. Credit reporting fees have jumped over 100 percent in some cases as the credit bureaus engage in brazen cartel-level price increases. Loan level price adjustments will continue to hit mortgage borrowers in certain categories, pushing up the actual interest rates for many prospective home buyers beyond what is advertised.
Illusion of Property Tax Reform Will Quickly Disappear
My prediction for 2024 is that the illusion of property tax reform gets exposed in short order. It will certainly be interesting to watch Texas appraisal districts initial notice values. I fully expect them to blow a hole in the Texas legislature’s landmark property tax “reform” effort of 2023. The part the good governor and his friends left out is that your local appraisal district will be vaporizing most, if not all, of the relief you saw as a homeowner in 2023. I was recently quoted in Newsweek on this very subject.
Higher market valuations & assessments will likely continue in 2024 as appraisal districts march to the comptroller’s drum. They have marching orders to hit the numbers to generate the appropriate level of tax revenues. They will still be playing catch-up due to 10 percent assessment caps from previous years. That means many Texas homeowners will see their assessed values increase yet again, in many cases completely offsetting the increase in the homestead exemption. Oops!
Inflation Rises from the Dead
Headline inflation for the month of December posted at 3.4 percent. Core inflation is still running at a 3.9 percent annual rate. Both measures are still solidly higher than the pre-pandemic trend. It doesn’t appear as though the rate of price increases is shrinking anymore. In fact, it looks like inflation bottomed in June of last year, and is now creeping up again while solidly above the 2 percent target.
December inflation data just confirm prices are still rising while partisan types of various flavors try to pretend it isn’t a problem. It’s also worth noting there are a number of mortgage and real estate industry participants calling for lower rates in 2023. Anything can happen in this volatile, distorted economy. We could very well see lower rates this year, but we might be in a recession when we get them.
If you are in the market to buy or sell a home in 2024, expect more volatility.
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