Wednesday’s interest rate hike, the fourth in the fight against inflation, continues to weigh on the housing market, even in North Texas.
A DFW realtor said buyers are more cautious because they fear they won’t be able to afford the purchase.
The average 30-year mortgage rate has already topped 7% for the first time in two decades, according to mortgage giant Freddie Mac.
Michele Wood and her husband are ready to move back home to Arkansas just so they can sell their house in Denton.
“I wish we had done it in August because our house probably would have sold by then,” Wood said.
Their three-bedroom, two-bathroom home in White Dove Lane has been on the market for 27 days.
There were several interested buyers, including two competing cash offers that were less sought after, but still no deal.
“Yeah, I was a little surprised, but the right buyer is out there,” said Realtor Joanne Condi of Remax DFW Associates in Frisco.
Condi said the red-hot North Texas real estate market is cooling after a strong summer with low interest rates and competition pushing up prices.
“In places like Coppell, if I held an open house there, I’d have 30 couples in line,” Condi said.
These days, only a handful of potential buyers show up at open houses.
Sellers and buyers now have to contend with rising interest rates, fewer showings and more inventory.
“I think we have to get used to interest rates of 7-8 percent,” Condi said.
Condi said inventory in and around Denton is now holding two months, but he doesn’t foresee North Texas seeing a six-month inventory that would signal a balanced housing labeling for both sellers and buyers.
House prices are falling.
“Krum, which is north of here, has started to drop prices,” she said. “Frisco also continued to lower its prices.”
And some sellers are turning to concessions again.
Wood is willing to give their buyer $3,000 that can go towards closing costs or if the buyer decides to sign up for ‘point buydowns’ to lower their interest rate.
“It’s a little expensive. Sometimes it can be $1,000 to $2,000, depending on the creditworthiness of the buyer and how much they’re putting down,” Condi said of the buydowns. “There are some lenders that even do a two-point buy-back and can get it down to 5%. So for the first year, you might have 5.5%, the second year of your mortgage it might be 6.5%, and then the third years back to what your mortgage locked up.”
Condi advises prospective sellers to first seek out an experienced real estate agent.
“Don’t do $50-$60,000 worth of improvements before you call the realtor because you might not get all that money back,” she said.
Be patient, but be prepared, Wood urged.
“Keep your house ready any time someone says, ‘I’d like to stop by,'” Wood said. “Absolutely! Come now. I’m ready for you.”