Recession and its impact on Real Estate.

  • Last week’s strong employment report has made the job of Fed even more difficult in colling off the economy.
  • Employers added 528K jobs and the unemployment was at pre-pandemic levels. The labor market is red hot at this time.
  • Unemployment slipped to 3.5% from 3.6%
  • There is also clear indication inflation has peaked and commodity prices like gasoline, copper, and lumber are clear indications of the same

What does this mean for interest rates?

    • St. Louis Fed President James Bullard said he expects another 1.5 percentage points or so in interest rate increases this year.

    •  The talks of recession have gone up but given the economy that looks to be mild or next to nothing.

Impact on Real Estate

The long-term rate has gone down. Mortgage rates have started to fall. Rates peaked at 5.8% on June 23 2022 and have since fallen down.

As of August, the rates stood at 4.99% for a 30-year mortgage.

  • Falling rates are good for real estate. In the last few months, the market has normalized and home prices in the DFW area have taken a breather
  • According to NAR – Pending home sales declined 8.6% from May as escalating mortgage rates and housing prices impacted potential buyers.
  • Pending sales retreated in all four major regions, with the West experiencing the largest monthly decline.
Home Sellers have started reducing their prices as the housing
market cools off.
  • According to Redfin home prices have been up 40% in the last 2 years but they have started to go down in the recent past.
  • Realtors have started to adapt to the new realities of this market.
  • Most agents have dropped the prices if they don’t receive the offer in the two weeks of their listing.
  • The playbook has certainly changed for Listing agents who listed the home and were swarmed by buyers with multiple offers and appraisal waiver clauses.
  • Buyer incentives such as closing costs have become a norm these days.
  • The market slowly but surely is shifting towards a buyer market

Texas Real Estate and unemployment report salient points 

Job Market in Texas is steady and strong.

  • Texas added 82,500 jobs in June, an almost 0.62 percent increase over May.
  • The state’s unemployment rate improved to 4.1 percent. 
  • The state’s labor force expanded by almost 40,000 a decline from 56K in May.

Real Estate Market

According to Texas A&M Real Estate Center

Housing Report for Dallas-Fort Worth-Arlington

  • Sales volume for single-unit residential housing decreased 8.85% YoY from 10,816 to 9,859 transactions.
  • The average sales price rose 18.8% YoY from $442,831 to $526,100, while the average price per square foot subsequently rose from $181.49 to $222.21.
  • Median price rose 21.13% YoY from $355,000 to $430,000, while the median price per square foot also rose from $170.14 to $209.76.
  • Months inventory for single-unit residential housing rose from 1.1 to 1.8 months supply, and days to sell declined from 56 to 54.

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