Texas Real Estate Loses Appeal During the Epidemic Boom
Formerly one of the most popular states during the epidemic boom, it is becoming less appealing to prospective purchasers.
ResiClub CEO and co-founder Lance Lambert said on Yahoo Finance Live (see video above) that “there is a lot of weakness in Texas when it comes to the housing market at large right now.”
Due to the sudden change brought on by increased mortgage rates and house insurance costs, only the most dedicated purchasers remain.
According to the most recent data from the Texas A&M University Texas Real Estate Research Center, the state’s sales volume decreased 14.2% in September compared to the same month last year.
The Federal Reserve’s most recent Beige Book contained reports from contacts in the Dallas district indicating a fall in house sales and buyer traffic and an increase in cancellations. They also mentioned that one major reason affecting activity was rising mortgage rates.
“Buyer incentives, including rate buydowns and discounting, remained widespread, and there were reports of additional incentives being offered to discourage buyers from canceling contracts,” according to the Beige Book.
According to the Texas A&M research, prices are also continuing to grow, rising 1.8% month over month or by about $6,000. In total, homes valued between $200,000 and $400,000 accounted for 56% of transactions.
“The Texas Repeat Sales Home Price Index peaked in July and retreated slightly in September,” according to the report. “After suffering major price corrections earlier in the year, home price growth has gradually grown back to rates comparable to the peaks from last year.”
However, it’s not the only factor discouraging purchasers. In order to make up for losses caused by bad weather over the past few years, home insurance firms have increased their rates and decreased their coverage.
According to S&P Global Market Intelligence data, approved home insurance prices in Texas, Oregon, Utah, Arizona, Illinois, and North Carolina have climbed by 20% to 30% since January 2022.
“Those markets, they saw prices move up fairly fast during the pandemic, but they’ve also been hit by insurance shocks, home insurance is moving up fairly fast in Texas and Louisiana,” Lambert stated.
“You’ve just seen some weakening because there is some supply, and some of the buyers in those markets had a bit of an edge and can kind of negotiate,” Lambert said.
There is, nevertheless, a hint of fresh activity. Redfin data shows that pending home sales in Dallas increased by 9.7% in October compared to September.
Redfin’s senior economist, Daryl Fairweather, told Yahoo Finance, “It’s just one month.” “It’s definitely possible it could go back down next month, but maybe it’s a start of a trend; it’s just a little bit too early to tell now if more sales are happening.”