Monday, September 15, 2014

Tight Inventory and Lagging Income Growth Mean Slower North Texas Home Sales in 2014

The recent report from the Real Estate Center at Texas A&M University shows a 2 percent dip in sales at the close of August from a year ago. That’s keeping with this year’s trends of higher prices and lower sales volume, as five of the last 8 months of 2014 have posted lower sales from the previous year.
“The agents tell me they could sell many more houses if they just had the inventory,” Real Estate Center economist Dr. James Gaines told Steve Brown at the Dallas Morning News. According to Brown’s August figures, the median home sales price in North Texas is up 8 percent from a year ago, with prices up 7 percent over the first 8 months of last year. Of course, with higher prices, that means fewer homebuyers overall who are able to afford a mortgage.
“Some buyers may be willing to wait and see if prices will level or decline, but they are probably not being very realistic,” Gaines told Brown. “Demand is possibly wavering as many people who wanted to buy while prices and rates were low have done so.”
However, I have to agree with David Brown of Metrostudy, an analyst who is quite surprised that the slower-than-expected sales volume in North Texas. He thinks tight inventory does play a role, but home prices are outstripping income growth, which is a huge factor.
“We have been anticipating the appreciation rate to slow somewhat this year because of decreasing affordability in some locations,” he said.
Of course, many sellers are also trying to off-load while the market is hot, but in their quest to make the most off of their real estate, they are pricing their properties outside of the market’s relative demand. I like to call this trend “self-esteem pricing.” It’s as if some sellers are still so very much attached to the sales price that dropping it to a level that will sell their home is like deflating their ego. Still, pricing a property correctly for the neighborhood and overall market is key to getting a home sold quickly.