Two of the most common questions we receive at AgentHarvest is “how is the real estate market doing in my area” and “at what point in today’s real estate market should I sell my house?” Depending on whom you ask, answers may vary. Ask a real estate agent and they’ll all say “NOW!” If you read the press releases from the National Association of Realtors, you’ll detect a “glass half full” optimistic spin on the market whether it’s going up or down. If you read the newspaper or watch the news, they love to put a negative spin on it because disaster stories make great news, even if they have to sensationalize it a bit to increase ratings. All three venues have their own motivation for their slant or spin so who should you believe? ME of course!
Believe it or not, the real estate market can never be described as bad, so cheer up. How’s that for spin? Let me explain. There are three types of real estate markets, a buyer’s market, a seller’s market, and a balanced or neutral market. A buyer’s market is a great time for buyers to find bargains; a seller’s market is a great time for sellers to reap rewards; and in a balanced market neither buyer nor seller has an advantage. So you see, the market is always great for someone. However, when the Dallas real estate market is described in terms of good or bad, or boom or bust, it’s always from the seller’s point of view because unsold houses are easier to measure than unfulfilled buyers. Another thing to remember is that real estate markets are local in nature. You shouldn’t be concerned about the market conditions in other cities or states. They probably have no effect on your market.
While many factors affect the Dallas real estate market, few are easily quantifiable or easy to track to the average homeowner. So, this article focuses on the market factors that you can follow to determine your local real estate market.
These factors are:
The Supply of Homes
- The current inventory of houses for sale
- Permits for new construction
The Demand for Homes
- The unemployment rate
- Population Changes
- Amount of Foreclosures
- Government Incentives
- Ease of Obtaining Funding
The Supply of Homes and the Demand for Homes
The supply of homes is made up of homes that are and will be available for sale in the next few months. Permits issued for new construction projects and current levels of home construction activity are also taken into account when determining the supply of homes over a certain time period. The supply of homes is usually referred to as an inventory of homes on the market. This supply is measured as time until depletion, in months. This measurement is useful because it takes into account homes that are and will be for sale, and the current and projected rates of sales activity. This measurement gives us a method of comparison between time periods that takes both supply and demand into account.
The Supply of Buyers
The supply of buyers also affects the demand for homes. Changes in local unemployment levels and changes in your area’s population can either increase or decrease the pool of capable buyers. Your local chamber of commerce can provide statistics on population changes and unemployment levels in your specific area.
In today’s economy, foreclosures are becoming commonplace and are high in many areas, like Texas. Experts are predicting yet another wave of foreclosures to occur this year (2010) and those houses should hit the market increasing the inventory of available homes. Artificial influences from federal, state and local government legislation also play a factor in both the pool of buyers and pool of houses. An example of this is The Federal First Time Homebuyer’s Tax Credit. This incentive enticed buyers to buy a house while the tax credit was in effect and take advantage of the tax credit. Whether this incentive actually created new buyers or just turned future buyers into current buyers has yet to be determined. Another example of government intervention is when local governments drastically raise property taxes to cover government deficits. Homeowners on a tight budget may be forced to downsize if their property tax payment increases their loan payment beyond the homeowner’s ability to pay. Of course buyer demand is useless if they don’t have the ability to qualify for a loan. If the amount of funds available for loans is tight, banks may be either hesitant or unable to make loans until they reduce their inventory of Other Real Estate Owned (OREO).
What Real Estate Market Data Should I Pay Attention To?
If you want to learn how the market is doing in your area then you’ll need to get that calculator out. The important statistics you should follow are:
Months of available inventory
Total number of houses sold
Average house price
Looking at these numbers can give you an accurate picture of the health of your local real estate market. Also remember that the more localized the data, the more useful it is. National and state statistics have no relation to your market. Try to find data that specifically relates to your city or county.
Statistics About The Dallas, Texas Real Estate Market And The Texas Real Estate Market
If you live in Texas then all of this work has already been done for you by the Real Estate Center at Texas A & M (http://recenter.tamu.edu/).
- Building Permits – http://recenter.tamu.edu/data/databp.html
- Texas Employment Levels – http://recenter.tamu.edu/data/dataemp.html
- Home Sales – http://recenter.tamu.edu/data/datahs.html
- Housing Affordability – http://recenter.tamu.edu/data/dataaffd.html
- Population Levels – http://recenter.tamu.edu/data/datapop.html
Texas A&M’s Real Estate Center is the best source for Texas’ real estate market stats. If you live in another state that doesn’t have an entity like Texas A & M’s Real Estate Center then you have some work ahead of you.
So How’s the Real Estate Market in Dallas, Texas?
Thinking of putting off the sale of your home until the market gets better? If you live in the Dallas, Texas area and are debating whether or not to sell your home, consider this. In 2009, Dallas, Texas only sold 5.5% less homes than it did in 2008 and only suffered a 5.26% reduction in the average home sales price when compared to 2008’s home prices. (Data source: https://www.recenter.tamu.edu/data/housing-activity/)
So let me ask you this. How worried were you in 2008 about the real estate market? If you weren’t that worried about it in 2008, then why should you put off selling your home over a mere 5.16% reduction from 2008’s average home price? You should be more concerned over missing the spring selling season than the bursting real estate bubble. While some real estate markets are undeniably in bad shape, other markets got through the crisis relatively unscathed. You just need to find out where your area falls in the scenario.
If you decide to go ahead and sell your house then your next step is finding a great real estate agent that knows how to best position your home to make it attractive in your neighborhood’s market. If you live in an area we service and want to find agents that rank in the Top 10 for sales in YOUR area, then use our free real estate agent finder service to find the agents that can best serve you.