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June Bucks the Real Estate Market Trends of 2019

The Collin County Association of Realtors (CCAR) reports that June brought many of 2019’s upward trends to a halt, while still delivering the highest median sales price ever reported by the CCAR Pulse.

Throughout 2019, sellers have listed their homes at a growing rate, increasing 43% from January 2019 (5,194) to May 2019 (7,440). June 2019 stopped this trend with 6.3% fewer new listings than May 2019 and 7.1% fewer listings than June 2018.

June was also the first month since January 2019 to have fewer listings under contract (-0.8%) than the year prior, while simultaneously showing a sharp decline of closed home sales than the month prior (4,649 vs. 5,365). Despite June’s dramatic departure from growth, the projected closed sales in June showed a slight increase from June 2018 (0.7%).

With fewer listings under contract in June 2019, inventory increased 8.9% from the year prior, creating 3.6 months of inventory. A market with 6 months of inventory is considered a balanced market, therefore Collin County remains a seller’s market.

Nevertheless, June did allow some trends to remain in tack. The number of days on market continued to decrease- homes remained on the market for 47 days in June 2019; the fewest amount of days on market for the CCAR Pulse area since October 2018 despite a 30.6% increase from June 2018.

Sellers who successfully snagged a buyer in June received 96.6% of their original listing price and, thanks to a 2.3% increase in median sales price from June 2018, received the highest median sales price ever reported by the CCAR Pulse ($332,500). This increase contributed to lower affordability for buyers, indicated by a Housing Affordability Index of 101.

David Alan Cox, CCAR 2019 President, was not surprised by June’s market activity. He explained, “Many home sellers and buyers want to accommodate school schedules; completing transactions in the late spring to early summer to allow children to be settled prior to the start of school. June served as a month of market correction.”

While many homebuyers spent June barbequing with their new neighbors, many are curious as to how many people were motivated to move in July.

Is Collin County the Tortoise or the Hare?

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that slow and steady really does win the race as slow growth rewarded sellers with record-breaking profits and buyers with increased ability to purchase their home along with strikingly high inventory levels in May 2019.

Seller’s increased profits were due to the median sales price hitting $326,500 in May 2019. A mere 2% increase from May 2018, yet resulting in the highest median sales price ever recorded for the  CCAR Pulse area. The same percentage of original listing price was received in May 2019 as the month prior (96.5%), signifying that the median sales price increase was a result of higher original listing prices in May 2019.

While an increase in sales price was good news for sellers, it was not necessarily bad news for buyers. In May 2019, the Housing Affordability Index increased 2%, matching the 2% increase of median sales price; indicating that the median household income is 103% of what is necessary to qualify for a median-priced home under prevailing interest rates.

Additionally, the CCAR Pulse area had a substantial 16.3% increase in inventory in May 2019 than May 2018 (13,983 vs. 12,020), providing buyers with ample homes to purchase. The increased inventory resulted in 3.5 months of inventory in May 2019, a 20.7% increase from May 2018.

However, high inventory does not mean a  slowing of sales. In May 2019, buyers continued to snatch up new listings at an increased rate, resulting in 15.5% more projected closed sales in May 2019 compared to the year prior (5,935 vs. 5,139).

David Alan Cox, CCAR President, reports that, “Collin County’s housing market is healthy and growing at a sustainable rate. It feels different from two years ago with bidding wars and messy multiple offer situations, but the slow and steady growth of 2019 has continued to provide seller’s with increased profits, while allowing buyers to breathe a bit easier when considering a home.”

Indeed, the tortoise pace of 2019 has removed the frenzy, provided seller’s with confidence their investment is appreciating, and allowed buyers time to consider their purchase. Not a bad way to win a race.

May 2019 Pulse Statistics Update Directed and Produced by Garrett Holton, CCAR Videographer/ Digital Media Editor

Collin County Job Growth Secures a Seller’s Market

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that while some real estate markets across Texas are approaching a plateau, Collin County is not one of them.

In April 2019, the CCAR Pulse area had 16.3% more projected closed sales than April 2018; continuing a three-month trend of month-over-month increases of projected closed sales. A trend that began in January 2019 with 2,528 projected closed sales and nearly doubling to 5,002 in April 2019.

The percent of original list price received by sellers also continued an upward climb that began in February 2019—resulting in sellers receiving 96.5% of their original list price. Contributing to a 3.6% increase in the median sales price from the year prior ($320,000 vs. $309,000).

While April 2019 exhibited favorable selling conditions, buyers experienced positive buying conditions. Healthy buying power was demonstrated by a 105 housing affordability index, as well as a 22% increase in inventory from April 2018.

This inventory is reflective of the traditional spring increase of new listings. However, April 2019 outperformed the previous spring with 3.5% more new listings compared to April 2018 (7,167 vs. 6,923). Homes also remained on the market 52 days in April 2019—up 23.8% compared to the same time last year, however the lowest Days on Market for the CCAR Pulse area since October 2018.

Correspondingly, the months supply of homes for sale increased in April 2019 compared to the year prior—resulting in 3.2 months of inventory. While a notable increase from the year prior, an insignificant change from the market performance throughout 2019. Signifying a steady seller’s market. A market is considered balanced when there is a 6 months’ supply of homes.

What does this mean for buyers and sellers? It means Collin County residents chose right. Collin County is growing, and will continue to grow as more companies move headquarters to the area and jobs are created. This provides sellers with a steady influx of buyers, while at the same time, providing buyers with steady jobs and increased earning ability—setting them up to buy when they are ready.

March Home Sales Provided a “Happily Ever After” for Both Buyers and Sellers in 2019

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that buyers and sellers hit their stride in March 2019, resulting in more projected closed sales, fewer days on the market, and an increase in percent of original listing price received.

In March 2019, there were 4.9% more new listings than March 2018 and 25.2% more inventory of homes for sale than the year prior.

Homebuyers were ready to purchase the increased inventory, resulting in 4.5% more listings under contract than March 2018, 6.9% more projected closed sales than March 2018, and the fewest days on market (60) for the CCAR Pulse area since November 2018.

The increase in sales may be in part to the housing affordability index of 106 in March 2019; signifying that the median household income is 106% of what is necessary to qualify for the median-priced home under prevailing interest rates.  The index may have been boasted by a 1.1% decrease in the median sales price of homes in March 2019 ($313,854) compared to March 2018 ($317,500).

However, the decrease in median sales price should not discourage sellers. When compared to February 2019 ($300,000), the median sales price increased a significant 4.4% in one month’s time, continuing a two-month trend of month-over-month median sales price increase.

Sellers also received 96% of their original list price in March 2019, continuing a three-month upward trend of original list price received. An indication of well-informed sellers setting competitive prices, an additional factor contributing to increased projected closed sales in March 2019 and decreased days on the market.

The months supply of homes for sale is one data figure that continues to remain steady for the CCAR Pulse area. March 2019 reported 3.1 months supply of homes for sale—the median months of homes for sale for the past 11 months. This represents a steady sellers’ market, despite increased inventory and slowing of sales prices.

“Spring is historically thought of as the peak season for real estate and the March market performance in Collin County has indicated this year will not be the exception,” remarked David Alan Cox, CCAR President.

As sellers prepare their homes for the market and buyers qualify for their home loans this spring, signs indicate a happy ending for all parties involved.

Winter’s Chilly Sales Pace Is Beginning to Warm Up

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that while the Collin County real estate market has had a slow winter, the promise of spring began to force its way through in February.

“Both buyers and sellers experienced positive outcomes in February. Sellers enjoyed solid offers from well qualified buyers, and buyers enjoyed more inventory than previous months,” reports David Alan Cox, CCAR President.

Indeed the February stats agree. In February 2019 there were 7.4% more new listings than February 2018, 29.4% more inventory of homes for sale than the year prior, and 2.6% more listings under contract than February 2018.

February 2019 also presented stats that are initially concerning for sellers when compared to 2018, but promising when examined next to January 2019. For instance, there was a 0.0% increase in the median sales price in February 2019 ($300,500) compared to February 2018 ($300,441). However, when compared to January 2019 ($289,450), the median sales price has increased a significant 3.7% in one month’s time.

The percentage of original listing price received in February 2019 decreased 1.2% compared to February 2018. Yet, remarkably, February 2019 was the first month since May 2018 that the percentage has increased from the month prior, with 0.8% more of the original listing price received in February 2019 than January 2019.

Homes also remained on the market 25.5% longer than the year prior for a total of 64 days. This is not an alarming increase when compared to January 2019, when homes remained on the market for 63 days.

Similarly, the months supply of homes for sale increased 38.1% from February 2018, resulting in 2.9 months of inventory of homes in February 2019. A large change from one year ago, but only a slight change from January 2019, which experienced 2.8 months supply of homes.

With such a positive experience for both buyers and sellers in February, many are hopeful that the winter chill is thawing and the real estate market will be warming up.

A New Year With New Challenges: A Lender’s Look at The Year Ahead

By Alexandra Swan (NMLS 117371), Willowbend Mortgage, Member of CCAR’s REALTOR®/Lender Committee

Happy New Year!  It’s hard to believe that the holidays have come and gone and a new year is upon us.

Both the REALTOR® and Lender communities experienced challenges in 2018, and as we roll into January those challenges will continue. The FED is expected to raise rates at least a couple more times in 2019, although they signaled in December that there might be fewer rate hikes than previously expected. Those rate hikes do not directly affect the mortgage rates, however they do affect the cost of other loans and the interest paid on everything from cars to auto loans. Higher interest rates mean that consumers are generally paying more to borrow money, which leaves less money for other expenditures—such as housing. We are also expecting higher mortgage interest rates in 2019 which will directly impact monthly mortgage payments and the amount of house that borrowers can afford.

As rates continue to rise, we are going to see markets continue to soften. Most experts believe that we are transitioning into a buyer’s market in 2019. That will create special challenges for a new generation of real estate professionals and loan originators who have never worked in a more balanced market.

On a brighter note, we are entering 2019 with a 6.9% increase for the new conforming loan limit for all of Texas. The new conforming loan limit of $484,350 for a single-family residence means that a consumer purchasing a $605,000 home can put 20% down and get a conforming loan rather than going into a first and second lien or a jumbo. Likewise, the new FHA loan limit of $395,600 for a single-family residence will allow FHA borrowers to have a wider selection of qualifying properties.

Additionally, Texas, and especially Collin County, remain strong economically. Collin County ranked #54 on the 2018 list of U.S. News 2018 healthiest communities and received “honor roll” status (updated November 20, 2018). The ranking scored Collin County on a number of factors, including education, access to healthcare, housing affordability and employment. We live and work in a thriving community that people from across the U.S. still choose as home. We have a lot to celebrate, and much for which we can and should be grateful.

In keeping with the CCAR 2019 mantra to “engage, equip and empower,” the REALTOR®/Lender Committee will work to engage with both the REALTOR® and Lender members to share ideas and solutions, to equip our members to better serve the consumers and each other through education about new products and programs, and to empower each member to learn and use new tools as we grow personally and professionally.

We meet on the second Tuesday of the month after the Plano Business Development meeting at the CCAR headquarters. We hope that you will make plans to join us as we make the most of the opportunities before us.

Home Affordability in Collin County and Surrounding Area Remains at All-Time Low

The Collin County Association of Realtors (CCAR) reports that November 2018 continued to be a difficult time to qualify for the purchase of a home. According to the Housing Affordability Index, the October 2018 drop of home affordability did not improve in November, and remained at 97 percent. This means that the median household income is only 97 percent of what is necessary to qualify for the median-priced home under prevailing rates.

The CCAR Pulse, which delves into the real estate markets of 37 local communities, reflects this decrease in affordability. In November 2018, Collin County had 7.2 percent fewer homes under contract and was projected to close 5.1 percent fewer sales. While it is traditionally accepted to see a seasonal decline in sales towards the end of the year, the decline is highlighted by a 3.9 percent decrease year-to-date in listings under contract—the first negative year-to-date stat regarding listings under contract our area has seen in over three years.

The median sales price of a home in Collin County increased again last month to $306,900—2.3 percent more than in November 2017. Sellers accepted on average 95.2 percent of their original list price after staying on the market for an average of 55 days in November 2018—a 14.6 percent increase in days on market than the year prior.

While experiencing an increase in days on market for home listings, Collin County also had 9.9 percent more new listings in November 2018, versus the same time last year. The combination of homes being on the market for more days while experiencing an increase of listings has allowed housing inventory to reach 3.1 months—a continuing sellers’ market.

What does this mean for buyers and sellers? According to Melissa Hailey, CCAR President, it means continuing home sales.

“Individuals who are home shopping during the holiday season are serious buyers. And right now, sellers are aware of the increase of home inventory and options that buyers have. This means the market is seeing motivated buyers and sellers who are ready to make a deal, and that’s a win for everyone,” says Hailey

Collin County Housing Market Approaching Balance; Still Better to Be a Seller

The Collin County Association of Realtors (CCAR) reports that the real estate market continues to favor sellers, but if trends continue, North Texas may soon find itself in a more balanced market. Over the past 12 months, median sales price has increased 1.5 percent to $301,500, which is 6 percent less of an increase than the year prior.

Simultaneously last month, the real estate market experienced 15 percent more homes for sale as compared to October 2017, supplying the market with 3.2 months of inventory. A market is considered balanced when it has six months of home inventory, a seller’s market if it has less, and a buyer’s market if it has a surplus above six months of inventory.

“It is important to remember, despite an increase in home inventory, those homes are still selling, and for more money than the year before,” says CCAR President Melissa Hailey. “It is still a great time to be a seller, Collin County is still experiencing growth, and buyers are excited to buy.”

The CCAR Pulse, which delves into the real estate markets of 37 local communities, supports Hailey’s thoughts, projecting that year-to-date closed sales have increased by 9.4 percent.

For the buyer, Hailey has encouraging news, “You are less likely to find yourself in a bidding war, and sellers are open to reviewing comps and setting a competitive listing price.”

On average, buyers paid 95.4 percent of the original list price of a home in October and homes stayed on the market an average of 49 days. The most popular segment of homes among buyers purchasing in October were those priced from $300,000-$499,999.

Last month, the housing affordability index declined 14.8% compared to the same time last year, hitting its lowest point in 2018. In addition, median household income was only 98 percent of what is necessary to qualify for the median-priced home under prevailing interest rates.

While many are anxious to see if the market continues to trend towards balance, the month of October gave both buyers and sellers reason to smile.

Giving Thanks: An Optimistic Overview of Market Conditions

By Alexandra Swan (NMLS 117371), Willow Bend Mortgage, and member of CCAR’s Realtor/Lender Committee

Give thanks!

Here in DFW, we in the real estate community (and all related industries) have a lot to celebrate this Thanksgiving season. And while a cooling market and rising interest rates may seem to some like the beginning of the apocalypse, those of us involved in CCAR’s REALTOR®/Lender Committee who have been around a few years want to remind everyone of a few of the many blessings we can count this year at the Thanksgiving table.

All statistics come from the Dallas Morning News, October 18, 2018.

  1. Statewide, sales are slowing as the market cools, but DFW still saw the largest number of home resales year over year from third quarter 2017 to third quarter 2018, with the total number of resales at 27,660 homes. The next closest market for number of houses sold was Houston at 24,028.
  2. In DFW, prices are up 3.9% year over year. The median resale price in DFW is currently $265,034.00.
  3. Although price appreciation is now slowing, median home values have risen more than 40% over the past five years, which means that many North Texas residents continue to enjoy strong equity in their homes—a significant advantage for move-up buyers wishing to sell a current property.
  4. DFW enjoyed the largest inventory increase of any of the major metros, up 14.5% from the third quarter of 2017.
  5. The average number of days on the market for a house is now 37—just one day more than the third quarter of 2017.
  6. The average number of months of inventory is now three—up from 2.6% in the third quarter of 2017. More inventory makes it easier for buyers to find the perfect home without getting crushed in a bidding war or consistently and repeatedly losing potential homes to cash offers.
  7. Interest rates are still amazingly low. Yes, you read that correctly. Twenty years ago, when some of us began our careers, 8.5% on a 30-year fixed rate loan was a good rate. Rates in the low 7% range triggered a sea of refinances in the early 2000’s. When rates fell to the mid 5’s after 9/11, consumers lined up to take advantage of the savings they could enjoy by reducing their interest rates and payments. Now, 17 years later, we have seen shockingly low interest rates for so long that we have forgotten that a 30-year fixed rate mortgage in the 3% range is not a reflection of normal market conditions. When we examine the past few decades of history, we see that interest rates are still very low, and housing remains affordable—especially as compared to other major U.S. markets.
  8. The overall economy remains strong in the third quarter of 2018, which is a good indicator for the continued health of the real estate market.

Author Andy Andrews states that perspective is the only thing in life that can change the outcome of a situation without changing any of the facts. Right now, rates are rising and an on-fire market is slowing down—compared to the last few years. By applying some perspective to the true state of our housing market, though, we can appreciate that our collective glasses are much more than half-full. We are in one of the nation’s top real estate markets, and our housing industry remains strong and viable.  We have much to be thankful for.

Happy Thanksgiving, from your REALTOR®/Lender Committee.

2017 in Review

Gifts That Keep On Giving, Version 2017

By Scott Drescher, Highlands Residential Mortgage and 2017 Chairman, CCAR’s REALTOR®/Lender Committee

2017 was a positive year, despite individual struggles that some of us may have endured. The CCAR REALTOR®/Lender Committee can point to improvements in the mortgage landscape practically every year, even those that were marred by over-regulation after the market crash. However, this year we received gifts, from Fannie Mae in particular, that will keep on giving throughout 2018, as well as some improvements in other parts of the industry. Setbacks? Sure, there are always a few setbacks, too, but the positives outweighed the negatives. In case you missed any, here are some of the ones we believe stood out.

At the beginning 2017 (and it seems soooooo long ago now), FHA was poised to lower the mortgage insurance premium for new mortgages, but it was quashed. That was a disappointing start to the year, but it turned out not to portend a bad year for home buyers.

Mid-year, Freddie Mac explicitly shut down 1% down payment mortgages that were the 3% down payment mortgages with lenders rebating 2% of the sale price to go toward the down payment. The problem for both agencies is that lenders were not following their guidelines, particularly when it came to not charging a higher rate to use premium pricing to pay for the rebate. Since lenders only net less than .60% (according to the 2016 report from Mortgage Bankers Association), it would mean that lenders who follow the rules would have to pay over three times the profit from other loans to fund the losses from just one, 1% loan – a bad idea for any business.

Qualifying buyers for North Texas’ ever higher sale prices is an ongoing challenge since prices began to rise after the recession. The Agencies (Fannie Mae and Freddie Mac) made it a little easier in 2017 in four ways. First and the most important by far, they raised the maximum debt ratio 50% for down payments less than 20%. Second, the Agencies both will allow one year’s tax return for self-employed borrowers when the borrowers have owned their business for at least five years. Third, non-mortgage debts paid by others will not be counted in the debt ratio of borrowers even if the payer is not a borrower on the debt. Fourth, Fannie Mae will allow more flexibility in using a lower payment for student loan payments than old way of using 1% of the balance that was calculated prior. These changes could all allow for substantially higher sale prices than before.

Another improvement that may occasionally create some headaches or even busted closings is the removal of liens and judgments from credit reports. This puts greater emphasis on the fraud guard reports lenders use because they are designed to pick up public records. Similarly, the title commitment may have them, too. Lenders who don’t order the reports early in the process are just asking for trouble.

As for double-edged swords, the news that the Agencies expanded appraisal-free mortgages to purchase loans could help avoid both value and condition potential problems. However, your REALTOR®/Lender Committee was quick to point out that it would preclude allowing a home buyer to renegotiate the purchase price due to a low appraisal (that he might have been counting on getting) or lender-required repairs (that he was hoping to require). The value of a REALTOR® as the option arises is never more evident than when a buyer needs the wise counsel regarding saving the appraisal fee or not.

In further automation upgrade news, Fannie Mae rolled out Day 1 Certainty. This allows lenders who use it to retrieve income and asset documentation from institutions who participate, eliminating the need for income and asset documentation that comply from being hunted down by buyers. Not only has this shortened the turn times in processing slightly, but it has also allowed for fewer questions and problems that arise when underwriters unintentionally see things that were better left unseen.

Probably the best news for REALTORS® in markets with rapid appreciation is that loan limits increase along with prices. For our area, the new conforming single family limit is $453,100, and the FHA single family limit is $386,400. This humble writer started in real estate when the conforming SFR limit was $191,250.

Of course, the biggest news of the year (testing to see whether anybody is really paying attention), was when Beyoncé and Jay-Z took out a $52 million mortgage to buy a house in 2017. As the highest paid celebrity couple, it’s unlikely they cannot afford the mortgage payment.  Although it is probably not a 30-year fixed, guessing at the payment using that as a guide puts the monthly at $263,476, but you should not have fear for the wealthy couple – they must have an interest-only adjustable rate mortgage because the payment was reported to be under $150,000 per month, making it much easier to pay, I’m quite sure.

Onward and upward, friends!