How inventory, interest rates, and inflation are impacting our market.
What’s been happening in the Dallas/Fort Worth market? It’s been a weird market in a lot of ways, so today I want to focus on the main reasons why: interest rates, inventory, and inflation. The three I’s will have a huge impact on our market moving forward, so let’s talk about them.
First, interest rates are on the rise. At the beginning of the year, they were hovering around 3.5%. Now, the average rate is close to 5%. I’ve even heard from some economists that rates may get into the 6% range by the end of the year. As rates increase, buyers’ purchasing power decreases, and you’ve probably already felt the impact of this.
Next, inventory typically increases in the DFW area in Q2 and Q3, but what’s happening this year? I can only speak to what I’ve seen, but while a home would recently sell in 24 hours with 20 or 30 offers, this is no longer the case. We’re definitely experiencing a bit of a slowdown, and while that has a little bit to do with inflation, I think it mostly comes down to interest rates. Many buyers are simply priced out of the current market. Something has to give, and it will probably be our increasing prices.
“Consider asking your buyers to expand their search areas.”
Don’t get me wrong; some properties still receive 30 offers in a matter of hours. However, things aren’t the same as they were a few months ago. I recommend you talk to your sellers and show them the market statistics. Let them know that now is probably the best time to sell that they’ll see for a long while.
Finally, let’s talk about inflation’s impact on the market. With the cost of living rising, many clients have told me they’re worried they can’t afford an increased monthly payment. To help them, I’m asking them to expand their search area and lower their maximum budget.
I try to look at things as a buyer triangle. The top is price, the bottom left is location, and the bottom right is condition. Most buyers can’t get all three, so have a discussion with them about what they’re willing to give up. Usually, there isn’t much room to be flexible with price, and many people want a move-in ready home. As a result, many of my buyers are expanding their searches.
If you have any questions, please call or email me. I am always willing to help!