North Texas housing affordability got crushed in October. The temporary relief of lower mortgage rates was just that. Mortgage rates bounced significantly following the Federal Reserve’s September rate cut. Real market rates for traditional U.S. mortgages remain near the 7 percent mark following the election.
The combination of real mortgage rates and continued high prices has proven to be a major challenge for the North Texas housing market. As rates and expectations cooled into the September FOMC meeting, available home inventory was beginnig to shrink. Denton County home sales jumped 10 percent from the previous year. Average home prices in Denton County rose 5.7 percent to $567,177. Pending sales (contracts) rose 17.2 percent year-over-year in October.
Post-Election Euphoria Fades
The jump in housing market activity we experienced in the past few months has quickly faded. What remains is a housing market mired by high home prices and mortgage rates more typical of the long-term trend. Local housing inventory has rebounded following the election now that reality has once again tempered expectations.
The reality is that DFW residents need two incomes to afford the typical North Texas home. That’s what the Atlanta Fed’s Home Affordability Monitor spells out in pretty simple language. Texas has seen a pretty significant gap between incomes and the spiraling price of homes. The real cost to join the property ladder is near a record high for North Texas home buyers.
The market share of first-time home buyers stood at 50 percent in 2010. It has fallen to only 24 percent in 2024. The median age of a first-time home buyer rose to 38, up from 33 prior to the pandemic. The median age of all home buyers in 2024 jumped to 56, up from 47 just a few years ago. Those are the sobering stats from NAR’s latest profile of home buyers and sellers.
Inflation Refuses to Go Away
The purchasing power of the U.S. consumer dollar contines to get clobbered. This is why home prices look so expensive. The Federal Reserve and U.S. government are still inflating away a giant pile of debt. U.S. consumers and working Americans are the collateral damage in this dynamic.
Core inflation and headline inflation both jumped in October, surprising many clueless economists yet again. Liquidity is still plentiful in the U.S. economy. Investors continue to gobble up affordable homes where they can find them. Consumers are still spending like drunken sailors, and imaginary internet money recently hit a new high. This is not rocket science. It’s just a ton of liquidity chasing a finite amount of assets. There was too much of it pumped into the U.S. economy, and that liquidity is still pushing up inflation.
A Little Relief for Renters
Single-Family rents have finally started to soften in recent months. At this stage any relief is welcome. This is still an economy which favors asset holders over renters. If you are leasing a DFW home or apartment, you need all the help you can get. The algorithmic price fixers are still working to keep your monthly outflows steady.
According to Apartment List the median 2-bedroom apartment in Denton Texas will set you back $1373 per month as of November. That’s down 1.4 percent for the month and down 2.7 percent from last year. The average price of a single-family rental in Denton County dropped 0.6 percent from last year. Rental prices have continued to level off with more inventory coming to the market.
If you are in the market to buy or sell a home, it’s still a tale of two worlds. The bifurcation in the local housing market mirrors that of the general economy. Asset holders and higher wage earners are still doing fairly well. The broader population, and particularly working-class Americans, are still getting buried by embedded inflation.
Leave A Comment