Denton County’s housing market continues to normalize. This healing process for the local market is challenging, but necessary. After massive distortions and market interventions, time is still the market’s best friend. There are many industry participants who still want a quick fix, but it bears repeating. Artificially low rates and bailout stimulus helped create the savagely unaffordable U.S. housing market. Another quick “fix” is the last thing we need.

Normal market interest rates have helped to bring more inventory back to the market. We’ve seen record amounts of inventory across many North Texas submarkets this summer. But don’t fret. The sky is not falling. The Denton County housing market is not collapsing. It’s responding to a normalization of real market-based mortgage rates.

Home Sales Rise in July

Denton County home sales perked up in July. Closed sales rose roughly 3 percent compared to the same time a year ago. Plentiful inventory and softening home prices pushed sales activity higher. Buyers were still out there looking for homes even with mortgage rates bouncing between 6 and seven percent. Go figure!

The rebound in sales activity is precisely what you should expect to see in a generally robust economy with abundant home options for buyers. It took several years of real market rates, but the housing market is finally healing. Denton County was sitting on five months of home supply in July, unchanged from June. We’ll likely see some existing home listings get cancelled as seasonality sets in. There are plenty of resale listings which are more accurately described as fishing expeditions.

Home Prices Continue to Soften

Median home prices in Denton County fell 1.1 percent to $459,800. Average home prices fell 1.3 percent year-over-year to $567,652. In terms of price per square foot, area home prices were even softer. Median price per square foot fell by 5 percent in July. Land is still expensive, but buyers were getting more square footage for their money than they did last summer. That’s a good thing.

Area home builders are continuing to make deals to move those new homes. Juicy incentives and generous rate buy-downs helped to lower the median price per square foot for a new home in Denton County by 11.7 percent!

There are plenty of owners who are not excited about lower prices, but softer pricing is precisely what the local market needs after a huge increase in pricing. The affordabilty gap with Denton County homes is still huge. Area incomes still don’t support the average priced home. This is why we’re seeing home prices continue to soften and normalize.

Rents Still Trending Lower

Single-family rents in Denton County were slightly lower year-over year. Median and average lease prices were down 2.3 and 1.3 percent respectively. Apartment List shows asking rents down 4.1 percent from last year in the city of Denton. It’s not uncommon to see one to two months of free rent at many area apartment developments. Abundant supply breeds competition. This is what the local market needed.

Time to Heal

The market still needs time to heal. Real incomes are still inadequate for most families to support local home prices. The affordability gap is real. A return of artificially low rates is the last thing we need when overall financial conditions remain loose. The stock market is near all-time highs. Home prices and rents are near all-time highs.

And yet there are plenty of crony capitalists screaming for lower rates. When you step back and look at the rationale for lower rates, you realize many of these crony capitalists aren’t interested in housing affordabilty or the health of the housing market. Many of them have become addicted to cheap liquidity and continuous bailouts. Those interventions come with consequences. When home prices and housing become disconnected from incomes, you get more wealth inequalty and more housing inequality.

The healing process can be uncomfortable, but we’re finally getting back to a more normalized housing market. That is a good thing.