When it comes to real estate trends for 2018, there is both good news and bad news. The good news is that home sales thus far have been hot in the first quarter of 2018, and sellers are unloading their properties at a profit.
As for the bad news, demand far exceeds supply, and buyers need to be more aggressive and motivated to grab a home this year.
Despite 2018 starting with a low inventory, the real estate market has not performed the same way it did 2 years ago. Prices are still significantly high because of low inventory while the multiple offer situations common a few years ago are non-existent.
In general, the market has slightly softened due to several factors. They include the tax reform bill passed in 2017, the interest rate increases being witnessed currently, and restrictions on foreign currency entering the US.
All these factors have contributed to a softer market thus far this year. Besides, it seems buyers are more discriminative than they were over the last few years. For example, three years ago, a small house with an odd layout would find a buyer in a short turn-around time. But in 2018, any property on sale with odd layouts or tight spaces has been much harder to tie to an agreement. Buyer enthusiasm seems to have faded probably because the rates have increased. When you factor in higher rates with higher prices, you’re likely to lose some buyers leading to a decrease in the real estate market.
The Story for summer 2018
As summer approaches, real estate activity is gathering pace at area lakes. A new real estate report ranks Canyon Lake as one of the most affordable large lakes in Texas. The report further states that real estate values in both the area and surrounding lakes have steadily been increasing.
Real Estate in DFW
According to a Cushman & Wakefield study, the highest office rent rate in North Texas is an average of $43.40 per square feet in the Arts District. The report defines the submarkets as CBD core, Arts District, and West End. West End’s vacancy is highest at 27% followed by CBD core at 24.5% and Arts District at 21%. Overall, the average vacancy rate in first quarter 2018 is the same as 2017.
The Dallas Morning News reported that despite an increase in mortgage rates and home prices, North Texas home sales rose 10% in February over last year. According to NTREIS data, real estate agents sold 7,188 preowned single-family homes in February. This was the highest February sales on record for the area. The biggest increase in home prices so far is $200,000 - $250,000.
Despite February being a slow month for home sales, the Central Texas housing market maintained its momentum. This is according to a February 2018 report by the Austin Board of REALTORS (ABoR). The report showed that while some home sales volume across the Austin-Round Rock Metropolitan Statistical Area (MSA) grew in February, areas with high market demand and low inventory experienced double-digit percent price increases and annual declines in sales activity.
In January, economists predicted a 5% increase in median home prices in the Austin area. Home price increases were highest in markets such as Austin and Cedar Park. But a decline in homes inventory in the lower price classes could discourage buyers.
In the Austin-Round Rock MSA, home sales increased 5.7 percent year-over-year in February 2018 to 1,955 sales. Single-family homes median prices increased 3.6% to $299,900. Housing inventory remained flat for the first 2 months of 2018, the same as February 2017.
The local Austin economy remains strong and continues to attract homebuyers despite stagnant wages and jobs. But the increase in population is adding pressure on local housing markets which are already experiencing low inventories. This has led to sharp price increases that both buyers and developers cannot maintain.
The disappointing home sales in January 2018 was due to a severe housing shortage. Demand is still there and homebuyers should expect to compete against other buyers. CoreLogic expects home prices for the rest of 2018 to grow by 4.3%.