Just a year ago the DFW (Dallas-Fort Worth) market area saw houses scooped up almost as soon as they hit the market. Often it was with multiple offers. While some market areas saw stable pricing – even some declines – the days on market as reported by NTREIS MLS were generally under 10-15 days. In some rare cases contract prices would be over listing price.
But that has changed. In the last 6 months we have consistently seen days on market get longer, with 60-90 days now being fairly common. So… WHAT HAPPENED? We can easily point to supply and demand. It’s not so much about the number of people wanting or able to buy as it is a problem with people NEEDING to sell. As the economy has tanked (let’s be real… it’s bad) more and more people are left with the unpleasant decision to refinance their home loan with a cashout or get a HELOC (same thing… just a second loan). The problem for Texans is that the law limits the amount of what you can cash out to 80% of the loan to value of the home. With more homes on the market this puts additional downward pressure on pricing, and it is those home sales that sets the market value for your home. When homeowners can no longer refinance their homes, they are forced to sell which add even more homes on the market than otherwise would be. This becomes a downward death spiral for home prices. All we can hope for now is that the economy improves, real jobs created or preserved, and that the interest rates come down below the 6 percent rate. All this will help stabilize the real estate market but until that happens there’s no telling where home prices will drop to. Forget Zillow, and ask a real estate agent about where prices and days on market are. Or better yet, get an appraisal from a local real estate appraiser. Knowing where your home’s value really sits is going to give you the best chances at surviving the coming housing crash.
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