Denton County’s housing market perked up in November. Post-election enthusiasm and renewed animal spirits helped push home sales up 10 percent. Median home prices jumped 2.2 percent year-over-year in November. Average prices rose even more, but the disconnect in the market continued. Wealthy property owners continue to skew the overall picture of the North Texas housing market. Area land prices are still grossly inflated.
The housing market isn’t nearly as healthy as many agents would have you believe. The jump in sales activity is certainly welcome, but it would be foolish (spelled intellectually dishonest) to call the current real estate environment healthy. We continue to see a huge disconnect between home prices and local incomes.
This has been a defining feature of the post-Covid real estate market. Too much liquidity and heightened investor activity are pushing up prices on the surface. At the same time, normal working families and first-time buyers are struggling to keep up with rampant inflation. First-time buyers remain near historic lows in terms of the percentage of overall transactions.
Buy vs Rent Premium Still Favors Renting
The premium for buying a home with anything less than a 20 percent down payment continues to favor renting in the DFW housing market. Too-high home prices translate to high carrying costs. That includes record high property taxes and record high insurance costs.
While home prices in Denton County remain near all-time highs, average rents have started to cool in recent months. Average single-family rental prices fell 2.6 percent year-over-year in November. Apartment List shows a 3.5 percent year-over-year drop for Denton Texas apartment rents.
Inflation is Still Raging
Inflation continues to wreak havoc with consumers and their budgets. Asset owners and wealthy property owners are doing just fine, but millions of Americans realize the economy isn’t working for them.
Major health insurance companies are raking in $billions in profits while they deny claims for care. Home prices remain out of reach for many young families who want to join the property ladder. Investor activity in the housing market is still all the rage. Developers are rejoicing at the thought of more tax breaks for opportunity zones.
Headline and core inflation have stabilized well above 2 percent, but many investors and Federal Reserve officials still believe there’s room for more rate cuts. It’s almost like they enjoy perpetually high (and growing) asset prices.
Many clueless economists continue to talk up the disinflation idea. Actual prices tell a different story.
The Fed hasn’t defeated inflation. This is why it’s wreckless for the incoming administration to even mention the idea of tax cuts to stimulate more demand growth. The new office of government efficiency seems to be keen on cutting grandma’s pension if they can use the money to feed more military exploits or provide tax cuts to billionaires.
The Federal Reserve, for it’s part, is still floating the idea of another rate cut before we end the year. Current 10-year Treasury yields and mortgage rates are simply a reflection of the Fed’s policy error since September. It seems we’re living in the golden age of fraud and Ponzi schemes. I guess it should come as no surprise that Fartcoin reached a market cap of over $640 million. That’s larger than 85 percent of publicly-traded corporations. Whee!
Bifurcation Continues
The market for home buyers and sellers continues to be bifurcated. Home sellers and builders still have it pretty good. Prices remain elevated, and demand is still relatively solid with ample liquidity among wealthier buyers.
The flip side is that weaker demand at the margins underscores a savagely unhealthy market where median buyers are struggling to make the math work on monthly payments which are simply unaffordable. There’s a reason why builders are still offering rate buydowns and big incentives to move new homes. They have to if they want to get many buyers to the closing table.
If you need some help with your next home purchase or sale, you know where to find me.
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