The Dallas-Fort Worth real estate market is currently among the country’s most rapidly changing markets. Home prices, inventory levels, and interest rates have seemed to change daily over the past few months. As a potential buyer, you are probably wondering if now is a good time to buy a house in the DFW area. While it is no doubt true that “good timing” is an important part of making a big move, it is not the only thing to consider before you begin your search for your next home. In fact, “buying at the right time” starts much earlier with an honest assessment of both the local real estate market and your own finances.
Here’s the DFW housing market update and why your own financial situation matters in this equation. We’ll review trends in home prices and market activity, current mortgage rates and their impact, and how the latest inventory numbers may help you make your purchase. By the end, you should be able to clearly weigh the pros and cons of buying in DFW right now and know what to do next.
The Current State of the DFW Real Estate Market
When it comes to making big life decisions, we all want to be as informed as possible about the state of the world around us. When that world is the DFW real estate market, here’s what you need to know to assess your options before you take the next step.
Home Prices and Market Trends
Home prices in DFW have been growing at a very fast rate in recent years. This trend has not ended, but it has slowed to a more modest single-digit appreciation, which we believe will be the “new normal.” This is good news for buyers, who will still see support for home values from the local economy and continuing population growth, but should experience far less of the bidding wars and multiple-offer conditions of the past.
Mortgage Rates
Interest rates are another major influence on affordability for buyers. While we’re not at the low levels we’ve experienced over the last few years, current mortgage rates are still historically average. That being said, the jump is very much noticeable for buyers compared to even a year or two ago, and monthly payments for most are simply not what they used to be. In fact, some buyers find themselves priced out of the market or having to adjust their budgets.
While this may be cause for concern, there are some benefits of today’s mortgage rates as well. Since there is less competition, buyers who do qualify may have an opportunity to negotiate with sellers more easily and possibly close the deal on a home for less.
Housing Inventory
Inventory, or the number of homes available to buy, has begun to rise in DFW after reaching all-time lows in both local and national markets. It’s still not quite a “buyer’s market,” but we are seeing more inventory at more typical levels.
Homes are also remaining on the market for longer periods of time, allowing buyers more time to weigh their options before making an offer. As days on market increase, we are seeing more negotiations taking place between buyers and sellers trying to seal the deal.
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The Most Important Piece: Your Financial Readiness
Beyond the market data, the biggest variable in the home-buying equation is your personal finances. Trying to perfectly time the market is a low-probability game; a much smarter strategy is to optimize the things you can control.
Begin by considering your savings. A healthy down payment not only helps you qualify for a loan, but can also lower your monthly payments and, in some cases, eliminate private mortgage insurance. It is also a good idea to have a separate emergency fund of at least three to six months’ living expenses, to help you weather any unexpected turns.
You will also want to take stock of your credit score and debt-to-income (DTI) ratio. The better your credit score, the more likely you are to qualify for a lower mortgage rate and, therefore, more affordable payments. Lenders typically like to see a low DTI, which indicates that your existing debt isn’t leaving you stretched too thin.
Finally, be sure to assess your own readiness to take on such a long-term commitment. Homeownership isn’t a “get in, get out” proposition; you are best served by thinking of it as a five- to seven-year or longer plan, so you are more likely to build up equity that helps to offset the initial costs of buying.
Should You Buy Now or Wait? Weighing the Pros and Cons
Do I buy now or wait? It is a question that’s on a lot of buyers’ minds these days. Weighing the pros and cons of buying now vs. waiting will help you figure out the right timing for you.
Reasons to Buy Now
- Building Equity: Your monthly mortgage payment helps you build equity in your home. Rent payments do not.
- Locking in your cost: A fixed-rate loan payment protects your primary payment from changes. Even if your taxes and insurance increase, the main part of your payment won’t. This can be a hedge against rent increases.
- Negotiating power: When inventory is high and buyers are scarce, sellers might be willing to make concessions to get a deal. That can mean help with closing costs, interest rate buydowns, or other concessions.
Reasons to Wait
- Interest rates: Interest rates on mortgages are high right now, but there is no guarantee they will decrease in the near future. If you wait to buy, there is a high chance that they could even climb higher.
- Further price decreases: While DFW may not experience a major price correction, some markets could dip a little. Waiting a bit could net you a lower price.
- Buyer beware: If you are not in a rush, waiting might give you time to shore up your finances. You could save for a larger down payment, lower your DTI by paying down debt, or improve your credit score. That could put you in a position for a better rate and terms when you are ready.
Your Path Forward in DFW
The Dallas-Fort Worth real estate market is very hot right now. But when is the best time to buy a house? The answer is that the right time to buy depends on when you feel financially secure, have considered your long-term goals and timeline, and are ready and sure about your decision. Don’t buy just because of a trend if you are not financially ready yet.
The market is never at its peak or at its bottom at the same time in every neighborhood and price point. The key to handling the ebbs and flows of the market is to work with an experienced local professional. The team at Buffalo Creek Realty has the data and information about current options available to help you decide if it is time to buy or if waiting a little longer is the best choice for your unique situation. We also have professional representation to match your needs exactly, whether you are buying or selling. When you are ready to make your move, call us. Let us help you take the next step with confidence.
