Homestead-Exemptions

Homestead Exemptions

by ResourcesVideo

In our newest video, Republic Title’s Sheri Groom and Matt Visinsky discuss what you need to know about homestead exemptions. A homestead is a house or other residential structure that is used for residential purposes. To qualify for homestead in Texas the owner must be an individual (a corporation or other business entity cannot have a homestead), and use the home as his or her principal residence.

Listen in as Republic Title’s Sheri Groom and Matt Visinsky explain:

  • What is a homestead?
  • What are some of the benefits and protections of homesteads?
  • Who can apply for a homestead exemption?

For more informative videos from the Republic Title Legal Team, check out our YouTube channel: https://youtu.be/OHUe02-4c4c

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January 2023 DFW Area Real Estate Stats

by ResourcesStatsVideo

January 2023 stats are in!

In January 2023, new listings are up in all North Texas counties that we report on over December 2022 so the much-needed inventory is coming to market.

Active listings are up across the board compared to this time last year ranging from 71% increase in Dallas County to 195% increase in Denton County. Compared to January 2022, average sales price has increased in each county except Denton which was down slightly.

Dallas is expected to be the top buyer’s market in the nation by year-end 2023 so all eyes are on the Spring selling season!

Our stats infographics include a year over year comparison and area highlights for single family homes broken down by county. We encourage you to share these infographics and video with your sphere.

For more stats information, pdfs and graphics of our stats including detailed information by county, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Texas-Housing-Insight-December2022

Texas Housing Insight December 2022 Summary

by Real Estate ArticlesResourcesStats

Housing was one of the primary contributors to inflation in 2022. The pandemic-induced housing frenzy officially ended when the Federal Reserve began raising interest rates in June in an attempt to curb inflation. Since then, mortgage rates and the possibility of a recession sidelined many potential buyers. Demand in Texas plummeted as annual housing sales fell more than 10 percent. Supplies started returning to pre-pandemic levels. Amid 2022’s drastic changes, many housing indicators improved as homebuilders and buyers quickly adapted.

Supply1

Homebuilders initiated fewer building projects than they did before the pandemic. Year-end single-family construction permits had a net loss of 8.4 percent year-over-year (YOY), shrinking from 170,557 permits to 156,189 permits in 2022. Monthly permits were flat in December, with fewer than 10,000 permits issued. Construction permits fell in all major metros. While housing demand in Dallas (2,786 permits) was mostly flat, Houston (2,886 permits)—the metro with the most construction permits in the nation—dipped 10 percent month-over-month (MOM). The gap between Austin’s (982 permits) and San Antonio’s (592 permits) housing expansion narrowed, as Austin’s monthly construction demand fell below 1,000 monthly permits for the first time since 2016.

Construction generally slows during the winter, and Texas’ single-family construction starts plummeted 33.5 percent from December 2021 to 10,203 units, corroborating a slowdown in the housing industry when accounting for the winter slump. According to Zonda, quarterly construction starts continued the fall from 3Q2022 in Texas’ four major metros except for Dallas-Fort Worth (DFW). While DFW’s construction starts rebounded 26.4 percent quarter-over-quarter (QOQ) and surpassed pre-pandemic levels, the remaining three metros fell short of 4Q2019 levels.

The state’s total single-family starts value diminished from $44.5 billion in 2021 to $38.4 billion. Houston and Dallas together contributed more than half of the state’s total at 29.6 percent and 26.6 percent, respectively. Austin’s market share was double that of San Antonio at 12.8 percent.

Active listings were flat at a seasonally adjusted rate of 91,600 units. Compared with the five-year average of 94,800 units before the pandemic, housing inventory was only 4.5 percent away from returning to the pre-pandemic volume. A year prior, inventory fell 50 percent short of pre-pandemic levels. Active listings in Austin fell 7 percent from November’s peak to 8,400 units, the first monthly dip since March 2022. This modest decline suggests Austin’s housing market may have returned to the traditional ebbs and flows seen before covid. Amid the recent slowdown, statewide months of inventory (MOI) ticked up to three months. The MOI for the four major metros ranged from 2.6 months to 3.4 months. While Dallas, Austin, and San Antonio inventories returned to pre-pandemic levels, Houston’s inventory was still below. 

Demand

Nearly 30 percent of total home sales vanished from December 2021 to December 2022.  In the past 12 months, sales volume sank from 37,200 to 26,300 closed listings. On a yearly basis, Houston lost the most in terms of both percentage and total volume, losing close to 35 percent and 3,500 units. On a monthly basis, Austin and Dallas lost the most in terms of YOY percent decline at 4.4 percent (Table 1).

Rising mortgage rates affect home sales disproportionately across price cohorts. For example, when the housing frenzy started to cool in the first half of the year, the affordable home market (homes below $300K) was hit first, beginning a streak of quarterly declines. Next, as the Fed’s interest rates became more aggressive in the second half of the year, the higher-end home market (homes above $750K) was hit worst, shrinking in a downward trend twice as fast as the affordable home market’s declining rate. Thus, affordable housing was hit first by rising mortgage rates with pricier homes following suit later in the year. 

With sales activity slowing, homes are sitting on the market longer. Texas’ average days on market (DOM) rose to 52. Compared with the five-year average of 59 days before 2020, the latest DOM metric suggests the housing market is quickly approaching historic norms. Annually, Austin’s DOM rose most aggressively, jumping from 19 days to 67 days. Constrained by diminishing sales, Houston had the most moderate DOM rebound, rising from 32 to 51 days.

Before the pandemic, the state’s DOM ranged from 55 days to 83 days. Now, DOM ranged from 48 days to 59 days. The relatively truncated DOM interval implies the housing market still has room to improve. Another metric that signals the housing market can be more relaxed is DOM for pricier homes. Typically, the most expensive homes sit on the market the longest. However, DOM for homes priced over $750K was 50 days—shorter than homes in the $400K-$500K price cohort.

Prices

Texas’ median home price peaked in May at $349,900 and has since been falling. Despite the price correction in the second half of the year, the state’s median price still rose 3.7 percent compared with a year ago. Homes in the Austin metro were most volatile, as the median price fell more than $78,000 from its peak, settling at a seasonally adjusted rate at $463,900 (Table 2). Austin was also the only metro area that reported a net loss YOY, while Dallas, Houston, and San Antonio reported YOY growth between 4.4 and 6.1 percent.

Median home price for new construction was over 15 percent higher than existing homes.

The ten-year U.S. Treasury bond yield dropped 27 basis points to 3.6 percent2 in December, while the two-year counterpart was at 4.3 percent. The spread between the ten- and two-year bond yields continued to widen. The negative spread indicated persistent market uncertainties, and ten-year bond yield was still far below 2007’s peak of 5.1 percent. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate moderated slightly this month to 6.4 percent, dropping from an all-time high of 6.9 percent in October.

Rapidly rising mortgage rates hit home prices hard over the past 12 months. The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Compared with December 2021’s 20.1 percent YOY increase, Texas’ index accelerated 5.5 percent YOY in December 2022, indicating price normalization. The same trend also affected the major metros as growth rates shrank from double- to single-digits, except in Austin, which had a net loss in home values.

According to the Texas Housing Affordability Index (THAI), purchase affordability decreased to 1.1 in 4Q2022, indicating median family income was 10 percent more than the required income to buy the median-priced home. This metric was down 35 basis points from 1.45 in 4Q2021, and it suggested that despite slowing home price appreciation, households faced more financial burden to buy a home due to the higher mortgage rate. For more information on how higher interest rates affect homebuying, read “How Higher Interest Rates Affect Homebuying.” 

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1 All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

2 Bond and mortgage interest rates are nonseasonally adjusted. 

Source – Joshua Roberson and Weiling Yan (February 14, 2023)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

Legal-Team

Meet Our Residential Underwriting and Legal Team

by Ask the ExpertInside Republic TitleResourcesTitle Information

As an industry leader and authority on the local real estate market, you can count on Republic Title’s highly trained teams and in-house attorneys to ensure your transaction closes quickly, with fast turnaround on title searches and underwriting decisions.

We are proud to highlight our Residential Underwriting and Legal team who are available to answer your questions and be a resource for you in working towards a smooth closing. Be on the lookout in the coming days to learn more about our incredible team of attorneys and how they are committed to helping you get to the closing table!

Matt Visinsky is Senior Vice President/Senior Residential Counsel at Republic Title. Matt has been with Republic Title for nearly 25 years. With experience as both an Escrow Officer and Branch Manager, Matt brings a unique perspective to his role. Matt’s attention to detail and extensive knowledge of the real estate transaction make him an invaluable member of our legal team. In his free time, Matt is an avid sports photographer and his work has been published in ESPN’s The Magazine, Sports Illustrated and GQ.

Wade Bogdon is Assistant Vice President/Residential Counsel and has been with Republic Title for over 8 years. Wade has an extensive knowledge in title rules and procedures which allows him to give excellent service to our customers. Wade is quick to respond to questions and is able to clearly communicate rules and requirements. In his free time, Wade enjoys watching Dallas sporting teams, cooking and restoring and researching historic homes.

With over 52  years in the title business, Jay has worked with developers, lenders, real estate agents and attorneys, gaining him a tremendous amount of experience and knowledge in the industry. Jay is known throughout the real estate community for giving back both within our industry and being incredibly active in the community. With a background as a Branch Manager, Jay has a reputation for his incredible customer service which has built many great lasting relationships over his time with Republic Title. In his free time, Jay enjoys spending time with his family as well as traveling, biking and hiking.

 

Steve Holley is a solution-oriented underwriting counsel who has the ability to make everyone comfortable in the transaction which allows our closing teams the ability to close and insure transactions seamlessly. With 30 years of title industry experience, Steve knows title laws and procedures like the back of his hand. Steve is a highly effective communicator with a plethora of knowledge and is one of our highly sought after real estate class instructors. A proud SMU alumnus, Steve is an avid outdoorsman and enjoys spending his free time with his family and at the ranch.  

Sarah Mann has 13 years working in the title insurance industry with experience both in the closing room and resolving title issues. In her 10 years with Republic Title, Sarah has served in many roles including Escrow Officer, Branch Manager and Residential Counsel. Sarah is known for her personal attention to each real estate transaction and getting deals to the closing table. Her experience in the closing room enhances the service she can provide to every customer. We are extremely grateful for Sarah’s experience, wisdom and heart for our clients!

 

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2022 DFW Real Estate Year-End Stats at a Glance

by ResourcesStatsVideo

Our second annual stats report of the DFW real estate market is here!

We’ve taken our monthly stats-at-a-glance reports from January through December of 2022, totaled, averaged, and compared the data to the numbers from 2021.  The result is an annual report of the DFW real estate market in 2022.  

For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas.

December 2022 Stats

December 2022 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStats

December 2022 Stats are IN!  Collin county shows an increase in all categories except number of sales compared to December of ’22.  Dallas County’s new listings for December were down 22% compared to last year, but active listings were up considerably from where they were a year ago. The average sales price was even down slightly at 1.4% as were the actual number of sales which is in line with the overall market.

In Denton County, the story is the same with new listing down and active listings up along with the average sales price and price per square foot. In Rockwall the numbers reflect generally the same situation.  As we begin 2023 however, the number of listings coming on the market looks strong and it appears that we are still in very good shape in the Metroplex! Happy Selling!

Our stats infographics include a year over year comparison and area highlights for single family homes broken down by county. We encourage you to share these infographics and video with your sphere.

For more stats information, pdfs and graphics of our stats including detailed information by county, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Housing-Insight-November-2022

Texas Housing Insight November 2022 Summary

by Real Estate ArticlesResourcesStats

The housing market continued to slow down as people consider mortgage rates and recession fears when making financial decisions. On the supply side, housing permits and housing starts are both in decline. Prices are correcting, and the market is accumulating inventory. However, as suggested by the sales volume, buyers are calmer now than during the pandemic frenzy, as many key indicators such as days on market (DOM) and months of inventory (MOI) are uniformly converging back to pre-pandemic levels. With the expectation of a higher mortgage interest rates annual average in 2023, existing-home sales will likely fall short of 2022’s levels.

Supply1

Homebuilders are initiating fewer building projects. The state’s year-to-date cumulative single-family construction permits in November 2022 had a net loss of 5.2 percent, shrinking from 157,043 to 148,954 units. The monthly drop paused in November, and construction permit issuance remained below 10,000 units. Construction permits rebounded in all major metros except Austin. Dallas (2,886 permits) gained more than 300 permits, while issuance in Houston (3,223 permits) stayed steady. Despite the slight decrease in Austin, the tech metro (1,341 permits) expanded residential space for single-family homes twice as fast as in San Antonio (663 permits). Construction generally slows during the winter, yet even after the seasonal adjustment, Texas’ single-family construction starts plummeted 28.5 percent from 2021 to 10,700 units, corroborating a slowdown in the housing industry.

The number of homes for sale typically declines after the summer peak. However, active listings have been quickly accumulating to a seasonally adjusted level of 91,600 units. Compared with the five-year average of 94,800 units before the pandemic, this November’s housing inventory level is only 4.5 percent away from rebounding back to the pre-pandemic volume, rather than 50 percent a year ago. Amid the rebound, Texas’ MOI ticked up to 2.9 months. Austin’s inventory level jumped to a ten-year high with 9,000 homes ready for sale, while Dallas’s housing supply was tight with 20,000 homes for sale, 3,700 fewer than in November 2019.

Demand

Total home sales inched down 3.3 percent month over month (MOM), settling at a seasonally adjusted rate of 26,800 closed sales (Table 1). Sales in Houston took a big hit, while sales in the other major metros stayed at October levels. Texas’ sales volume has shrunk by one tenth compared with a year earlier. As winter approaches, sales are expected to trend downward for the next two months.

Rising mortgage rates affect sales of differently prices homes disproportionately. Up to November, total sales for homes priced below $300K plummeted close to 30 percent in 2022, while total sales grew 15 percent for homes priced between $400K and $500K. The sales disparity between these two groups could suggest that rising rates sidelined more homebuyers in the lower-middle class than upper-middle class.

Amid slowing sales, homes are sitting on the market longer. Texas’ average DOM rose to 46 days. Compared with the five-year average of 59 days before 2020, the relatively brief period suggests the housing market is still relatively tight compared with historic norms. At the metropolitan level, Austin’s DOM rose most aggressively, doubling from 27 days in June to 57 days in November. Dallas’ DOM grew most moderately, rising from 25 to 42 days.

Before the pandemic, the state’s DOM ranged from 55 days to 83 days. Now, DOM ranged from 45 days to 52 days. The relatively truncated DOM interval implies the housing market still has room to improve. Another metric that signals the housing market can be more relaxed is DOM for pricier homes. Typically, the most expensive homes sit on the market the longest. However, DOM for homes priced over $750K was 45 days—shorter than homes in the $500K price cohort.

Prices

Texas’ median home price continued to fall, and the seasonally adjusted median price edged down 1 percent MOM. The four major metros posted mixed monthly changes (Table 2). Regardless of the depreciation in the past six months, the state’s median price remained 6.1 percent higher than year-ago levels. Dallas had the highest growth of 9.6 percent, while Austin’s growth rate deflated to 0.1 percent.

Since the Federal Reserve imposed the first 75-basis-point interest rate hike in June in an attempt to curb inflation, the ten-year U.S. Treasury bond yield jumped 129 basis points to 3.89 percent2, while the two-year counterpart surged by 150 basis points. The spread between the ten- and two-year bond yields widened while staying in negative territory, indicating persistent market uncertainties.

The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate moderated slightly this month to 6.81 percent, but it still surpassed historical rates during 2007 and 2009. According to a Wall Street Journal analysis, some buyers have had to dodge the conventional way of borrowing from traditional lenders and instead borrow directly from family members or leverage either business or personal assets. 

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Compared with November 2021’s 19.5 percent year-over-year (YOY) increase, Texas’ index accelerated 9.2 percent YOY in November 2022, indicating price moderation. The same trend also affected the major metros as growth rates shrank from double-digits to single-digits, except in San Antonio, which was 12.8 percent. Moderating home prices corroborated with the Fed’s inflation fight.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, after last year’s historical low rates, the share of homeowners who were free from mortgage payments ticked up 3 percent to 36 percent in the U.S. and up 5 percent to 42 percent in Texas (Table 3). The share of homeowners who were caught up on payments increased as well.

_________________

1 All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

2 Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

Source – Joshua Roberson and Weiling Yan (January 10, 2023)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

Blog

What You Need to Know About The 2023 TREC Contract Changes

by EducationReal Estate ArticlesResources

In November 2022, the Texas Real Estate Commission adopted form revisions recommended by the Texas Real Estate Broker-Lawyer Committee that will become mandatory on February 1, 2023. Read on for the key takeaways as well as several different resources to help you navigate the upcoming changes.

  1. On November 7, 2022 the Texas Real Estate Commission adopted form revisions recommended by the Texas Real Estate Broker-Lawyer Committee. When are the forms effective? TREC says “The Notice to Prospective Buyer form is a voluntary use form and may be used once posted on the agency’s website. All remaining contract forms, once posted on the agency website, will be available for voluntary use until February 1, 2023, when their use becomes mandatory.” 
  2. The following forms have been updated/changed:
    Purchase Contracts –
    • One to Four Family Residential Contract (Resale)
    • New Home Contract (Incomplete Construction)
    • New Home Contract (Completed Construction)
    • Farm and Ranch Contract
    • Residential Condominium Contract (Resale)
    Addendum & Amendments –
    • Seller Financing Addendum
    • Addendum for Property Subject to Mandatory Membership in a Property Owners Association (HOA Addendum)
    • Amendment (Contract Amendment)
    • Third Party Financing Addendum
    • Addendum for Reservation of Oil, Gas and Other Minerals (Oil & Gas/Mineral Rights Addendum
    • Addendum Regarding Residential Leases (Lease Back Addendum)
    • Addendum Regarding Fixture Leases
    • Loan Assumption Addendum
    • Notice to Prospective Buyer
  3. The forms listed above are available on the TREC website and zipForms now and will replace the old versions of the forms. https://www.trec.texas.gov/article/revised-forms-available-voluntary-use-mandatory-use-begins-february-1-2023

HIGHLIGHTS OF THE CHANGES

WHICH FORM & SECTION?
Paragraph 3 of the One to Four Family Residential Contract (Resale)
WHAT’S CHANGED?
The Contract was changed to define the Cash portion of the Sales Price as follows: The term “Cash portion of the Sales Price” does not include proceeds from borrowing of any kind or selling other real property except as disclosed in this contract.
The Buyer should disclose if they are obtaining any financing or selling a property to obtain the cash portion of the Sales Price. Additionally, the Third Party Financing Addendum is updated to add “Other Financing” to accommodate alternative or hard money lenders.

WHICH FORM & SECTION?
Paragraph 7F of the One to Four Family Residential Contract (Resale)
WHAT’S CHANGED?
This paragraph is revised to require that the Seller: (i) provide the Buyer with copies of documentation related to repairs that shows both the scope of work and payment for the work completed; and (ii) transfer, at Seller’s expense, any transferable warranties related to those repairs at closing.
Also note, paragraph 9B(3) is amended to add that at closing, the Seller and Buyer shall execute and deliver any documents required for the transfer of any warranties, which could include additional warranties not covered under paragraph 7F.

WHICH FORM & SECTION?
Paragraph C of the Addendum for Property Subject to Mandatory Membership in a Property Owners Association (HOA Addendum)
WHAT’S CHANGED?
Paragraph C is amended to clarify that regular periodic maintenance fees, assessments or dues (including prepaid items) are prorated under Paragraph 13 of the contract and are not subject to Paragraph C of the Addendum.

Want to learn more? Join one of our three upcoming Contract Forms Update classes which will cover the 2023 changes.

January 11th with Steve Holley, Senior Vice President/Residential Counsel

January 20th with Matthew Visinsky, Senior Vice President/Senior Residential Counsel

January 26th with Charles Kramer, Independent Legal Counsel, Hunter & Kramer PC

Register now at www.republictitle.com/residential-education

Supplemental information to accompany Contract Forms Update classes can be found here: Contract Forms Update

Click here for printable version

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November 2022 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStats

November 2022 Stats are IN!

Active listings are up across the board with an increase of over 100% in Collin, Dallas, Denton, Rockwall and Tarrant counties compared to last year. It will come as no surprise that the average days on market has also increased in these counties over last year’s market. The number of sales in November has declined around 30% in each of the counties we report on compared to November 2021.

Although the real estate market is changing, North Texas continue to be one of the leading markets across the nation as we head into 2023. The National Association of REALTORS recently ranked the Dallas – Fort Worth – Arlington market as the #3 real estate market to watch next year.

Our stats infographics include a year over year comparison and area highlights for single family homes broken down by county. We encourage you to share these infographics and video with your sphere.

For more stats information, pdfs and graphics of our stats including detailed information by county, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Housing-Insight-October-2022

Texas Housing Insight October 2022 Summary

by Real Estate ArticlesResourcesStats

Since the Federal Reserve announced the first 75-basis-point increase in June of this year, the housing market has retreated with both demand and supply slowing down. Home sales were down 7.4 percent over the previous month, and housing starts for apartments doubled in a year as investors adapted their strategies from selling single-family homes to renting out apartments. As the Fed continues its aggressive inflation policies, mortgage rates will not drop until inflation is curbed. Home prices have been depreciating, and Austin—the metro that inflated the most during 2021—saw the largest depreciation amid the market’s abrupt slowdown.

Supply1

Texas’ single-family construction permits dropped below 10,000 units for the first time in two years. Despite slowing housing activities, Texas remained most active at authorizing construction projects, surpassing No. 2 Florida by one additional permit for every nine permits. Construction permits fell in all major metros except Houston. Dallas (2,545 permits) contracted by more than 700 permits in the past month, falling to a three-year low, while demand in Houston (3,226) stayed steady. As usual, Austin (1,380) was building homes twice as fast as San Antonio (629). Contrary to the weakened single-family sector, permits for Texas’ multifamily sector grew robustly. The number of issuances both for 2-4 family homes and apartments doubled from the year before.

The lumber producer price index (PPI) fell four times in the past six months, and the input cost had slid 17.6 percent since the year started. Since June’s interest rate rise, the South’s total housing starts plummeted quickly. However, this measure of new-home construction jumped to its highest level since bottoming out in June to 808,000 units in October, as housing starts inched up 6.7 percent month over month (MOM). Growth was driven largely by multi-unit construction permits while single-family units continued to stall.

While new homebuilding projects are slowing, the state’s current supplies have been accumulating. Active listings grew 6.6 percent MOM to a seasonally adjusted rate of 89,800 units. Compared with March’s inventory of 41,800 units, the metric has doubled, and the state has nearly recovered to the pre-pandemic level. Accordingly, Texas’ months of inventory (MOI) ticked up to 2.7 MOI. San Antonio led the pack with three MOI, followed closely by Austin. Dallas remained the tightest with 2.3 MOI. This trend suggests a cooler housing market, considering the conspicuously low inventories in the past two years.

Demand

Total home sales diminished 7.4 percent MOM, settling at a seasonally adjusted rate of 27,900 closed listings (Table 1). Texas’ four Metropolitan Statistical Areas (MSA) all mirrored the statewide trend, as sales in each metro shrank by double digits YOY. The rapid decline in housing sales has revealed how important low mortgage rates are to the latest housing frenzy. According to Texas Realtors’ Data Relevance Project, October sales were down 21 percent from a year earlier. At the current rate, year-end 2022 sales will likely fall short of 2021.

Amid this plunge in demand, the remaining buyers prefer new homes to existing homes. When sales were differentiated by the existing-home market and the new-construction market, the state’s cumulative sales volume plummeted 8.8 percent YTD in the former sector, while the same metric jumped 9.2 percent in the latter sector. The sales disparity was even more pronounced in Austin.

Closed listings for homes priced below $300K fell below 10,000 transactions for the first time in a decade, falling close to 50 percent compared with February 2020. This is partially due to the fallen overall demand but more because of the rapid appreciation brought by the housing frenzy. Due to the rapidly rising price, the market share for home sales in this price cohort fell from 84 percent to 39 percent in the past ten years.

Homes are sitting on the market longer as a result of slowing sales. Texas’ average days on market (DOM) balanced at 42 days. DOM ranged from 37 days in Dallas to 47 days in San Antonio. Despite the prolonged waiting time, compared with the five-year average of 59 days before 2020, the relatively short period suggests the housing market is still relatively tight compared with historic norms.

Additionally, in February 2020 DOM ranged from 55 days to 83 days respectively for homes in the median price cohort and in the higher-end tail. In September 2022, the DOM interval was 43 to 44 days. The truncated DOM interval both in terms of value and difference of the two price cohorts implies the housing market still has ample room to fully return to the normal level.

Prices

After a mild moderation in September, Texas’ median home price continued to decline. The state’s seasonally adjusted median price edged down to $338,000, decreasing 1.6 percent MOM. The four major metros posted mixed monthly changes (Table 2). Regardless of the recent depreciation, prices in these MSAs remained higher than their year-ago levels, with the lowest growth in Austin at 4.8 percent and highest in Dallas at 11.1 percent.

As the Federal Reserve imposed forceful monetary policies to curb inflation, the ten-year U.S. Treasury bond yield jumped to 3.98 percent2, while the two-year counterpart surged by a similar amount. The spread difference between the ten-year and two-year bond yields widened slightly while staying in negative territory, indicating persistent market uncertainties. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate elevated further to a 20-year high at 6.9 percent. This rate surpassed all historical rates during 2007 and 2009.

Rapidly rising mortgage rates diminished purchasing power and sidelined many prospective buyers. According to the Mortgage Bankers Association, mortgage applications for new-home purchases plummeted more than one fourth from year-ago levels, and the national median payment rose 3.7 percent to $2,012 in October. According to a Wall Street Journal analysis, some buyers have had to dodge the conventional way of borrowing from traditional lenders and instead borrow directly from family members or leverage either business or personal assets.

The Texas Repeat Sales Home Price Index, which accounts for compositional price effects, corroborated the trend of mixed responses in major metros, with Fort Worth falling 1 percent MOM and San Antonio rising 0.3 percent MOM. On the year-to-year levels, the annual appreciation ranged from 3.7 percent to 10.8 percent, with Austin growing the least and Dallas leading the pack.

Household Pulse Survey

The U.S. Census Bureau’s Household Pulse Survey indicates that despite rapidly rising mortgage rates, the share of Texas homeowners behind on their mortgage payments stayed at 4 percent as in September (Table 3), on par with the national level. This implies that while the outlook on the overall housing market dimmed, homeowners’ financial health remained healthy. Texas owners especially bolstered their housing status, as the owned free/clear homes rose 4 percentage points above the national average. Fewer Texas homeowners reported the possibility of foreclosure on average as the proportion of delinquent individuals at risk of foreclosure dropped to 4 percent (Table 4). These numbers suggested many prospective homebuyers, who were initially not confident about their financial stability, may have opted out of buying a house during this period.

_________________

1 All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

2 Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

Source – Joshua Roberson, Weiling Yan, and John Shaunfield (December 7, 2022)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight