Texas

Rates, prices and stocks will determine the fate of the Denton housing market in 2023

Denton’s housing market starts the year on a new footing and with yet another opportunity to absorb higher interest rates.

Home sales ended 2022 continuing their downward trend. December sales fell 19% year-over-year. A major round of year-end discounts by local builders helped push pending sales to near zero year-over-year.



Aaron Layman


These discounts and promotions have also helped drive home prices down. The median home price in Denton fell $20,000 in December. This resulted in a $55,000 (13.4%) decline in local home prices from their summer peak. House prices in Denton have lost almost all of their growth in 2022. Prices in December rose by only 1.4% compared to the same period last year.

This leaves a number of home buyers in the spring and summer in an unenviable position. Many DFW buyers who bought properties in the spring and summer of 2022 are now sitting in homes that cost less than they paid for them. It turns out that home prices can and sometimes do fall. They could drop sharply when your central bank is forced to reverse a decade of easy money policy.

The message finally reaches consciousness. Quantitative tightening by the Federal Reserve is real. It’s real, whether market participants like it or not. It took some time for sellers to realize that the market is changing in 2022.

As soon as reality set in, the reaction function became abrupt. The average percentage of listings in Denton has plummeted during the last half of the year as sellers realize that homes don’t cost as much when interest rates double. The median percentage of the list for December fell to 96.5%. The average percentage of the list fell to 94.9%.

Buyers have devoured much of the available supply at the end of the year, but there is still inventory waiting to hit the market. A new sales season is approaching, and with it another restocking. The builders managed to get rid of some stocks, but there is a lot of unfinished work. Many unsold homes that have been taken off the market will soon reappear.

The big question for 2023 remains how high and for how long. There are still a few more rate hikes scheduled on the Fed calendar. Once the Fed hits rate caps, it may have to leave them there for a while. We are still in a strange dynamic where some prices remain consistently high while others have bounced back. Lumber prices, for example, are almost back to normal. Many other items are missing.

Inflation, mortgage rates and liquidity continue to drive the housing market. There is always hype and excitement around “unmet demand”. In the end, it is rates, prices and stocks that will determine the fate of Denton’s housing market this year. Availability is what drives demand. At present, it appears that the housing market may need additional relief in this area. Either rates are falling or prices have more room to fall.

The good news for potential homebuyers is that the market rebalancing will continue into 2023. Many potential home sellers are still enjoying significant capital gains. Real estate brokers and salespeople probably won’t like the continued softness in the housing market, but that’s okay.

The reality is that too many agents are chasing customers. The inevitable cleanup and consolidation coming for the industry will ultimately benefit consumers. The pandemic boom and bust has shown how many agents were willing to ignore fiduciary duties in order to make money. As the Fed tightens policy and ends the era of free money, more leveraged speculators and unscrupulous behavior are being revealed for what they have always been. From crypto to real estate, the topic is the same. If sunlight is a good disinfectant, the real bet has the same benefit.

The rent is still hot

Single-family rents ending in 2022 are still well above pre-pandemic prices. Single-family rent in the city of Denton was 12.1% higher than a year ago. The median home rental price in Denton in December was $227 more than last year.

Apartment listing data for the city of Denton shows that rents are up 8% year-over-year. This is despite a modest decline of 1.4% in December. The figures show that Denton apartment rents are up 26% since March 2020. This includes an impressive jump in 2021 that has seen rents skyrocket.

Large apartment owners and people profiting from rent fixing software would probably like you to forget that rents are still high. Better to focus on these modest monthly declines.

RealPage’s Jay Parsons suggested starting the year with quality gaslighting, noting how “disappointing” it is that Congress ended 2022 without more action to help low-income tenants and support affordable housing. Obviously, this was one of the “big” stories that you may have missed during the holidays.

“It was depressing to see that Congress did not expand the low-income housing tax credit or even reinstate the lost 12.5% ​​increase, which alone would fund approximately 55,000 affordable apartments in a $1.7 trillion budget. Congress has also failed to expand housing vouchers despite long waiting lists.”

Lawyers are still arguing over the location of an antitrust case involving RealPage and dozens of property management companies, Reuters reported. The National Law Review published a summary of what is arguably the larger story.

“RealPage, Inc., a real estate software and data analytics company, is facing a class action lawsuit and a federal investigation over whether it facilitates a data-driven real estate rental cartel with landlords and property managers by driving up the prices tenants pay each month. “.

Apparently, American taxpayers need to provide more subsidies for affordable housing. The irony here is that part of RealPage’s pricing advisory services includes an offer to help clients “maximize revenue from affordable, rent-limited properties.” Interestingly, Mr. Parsons missed this small point in his post, talking about the need to take action on affordable housing.

As Conor Gallagher explains, Wall Street’s involvement in the rental market is a key driver of the rise in homelessness in the United States. One of the first steps in solving a problem is realizing that there is a problem. It’s nice to see that some people are waking up to reality. People like Lena Khan of the Federal Trade Commission take their job of curbing monopoly power seriously.

The Federal Trade Commission (FTC) recently proposed a rule to eliminate non-compete agreements with employers. The agency estimates that this could increase workers’ earnings by nearly $300 billion a year! These are positive developments. American workers and consumers have been used and abused by the powerful for decades as regulators turn a blind eye. It looks like this era is coming to an end. The winds of change are blowing.

“What is created by man can be destroyed.” — Louis D. Brandeis

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