Dallas Housing Market: October 2023 - Leaves aren’t the only things Falling!
October Dallas Housing Market Highlights:
Closed sales are down 11% from September, and down 33% since May’s high
Median Sales Price is down 1.1% from September, and down 4% since Mays high.
Months Supply is up to 3.5 months, up slightly from September.
Days on Market is up to 27 days from September 26 days.
Median Percent of Original List Price dropped to 96.9% down from 97.2% in September.
Welcome back! Today, we are diving into the fascinating world of the October Dallas, Texas housing market trends. As we enter the enchanting season of Fall, our minds are filled with vivid imagery of changing colors, gracefully falling leaves, and the refreshing crispness in the air. Interestingly enough, the Dallas housing market seems to follow a similar pattern year after year, mirroring the natural phenomena around us. Just as the leaves gracefully descend from their branches, housing prices, closed sales, and various other housing market metrics also experience a gentle decline during this time. Now, the question arises: should homeowners feel a hint of concern? Or perhaps, are we witnessing the perfect opportunity for aspiring homeowners to seize the moment and finally find their dream abode that previously felt just out of reach? Join us as we peel back the layers, present the cold, hard facts, and provide you with an enlightening perspective.
Is the Dallas Housing Market Crashing?
When analyzing the housing market in Dallas, Texas, it is important to determine whether the current state of affairs is standard or the onset of a new trend. Upon closer examination, it becomes evident that the Dallas housing market follows a relatively consistent cycle. This recurrent pattern has been a frequent topic of discussion in our articles, illustrating the rhythmic ebb and flow of the housing market in Dallas, Texas. Barring extraordinary circumstances such as war or plague, the market in Dallas adheres to a distinct rhythm that can almost be timed to perfection. The growth cycle begins in spring, immediately following the bottoming out of the housing market around January each year, as demonstrated by the interactive chart provided below. Subsequently, a steady upward trend persists until June or July, aligning with the exhale of the market following the summer season and the start of the school year in autumn. However, after reaching its peak, the market experiences a decline that extends through to the next January. This recurrent cycle showcases the unique dynamics of the Dallas housing market, providing crucial insight for both buyers and sellers alike.
CLICK TO SEE all the Dallas Housing Market Statistics
So the question remains, is this normal what is happening in October, or due to several macro level / geo-political events going on in the world (High-interest rates, high inflation, war in Ukraine and now the Middle East) could there be more severe downturns than we would normally have in the housing market cycle? Let’s examine this logically for a few minutes and delve deeper into what would cause the housing market to crash.
If we take a step back and think about ourselves for a moment, we may wonder why we would HAVE TO sell our house. What events would cause us to give up and just sell? Well, for some, it could be a major life event such as the loss of a job or the death of a loved one, which dramatically changes the financial ability of the family. Maybe a divorce forces the sale. These are pretty common occurrences in many people’s lives, but they do not tend to happen on a large scale all at once.
To truly cause a widespread and severe downturn in housing prices, it would require a substantial number of transactions in the metro area. Multiple individuals and families would need to be compelled to sell their properties simultaneously, creating a significant imbalance in the housing market. Such a scenario would greatly impact the overall stability of the market, potentially leading to a more severe downturn than anticipated in the housing market cycle.
Possible Causes of the Dallas Housing Market Crash?
Looking at some of the possible reasons a severe housing market correction to ensue, we will see which could be indicating impending doom for the Dallas TX housing market.
EMPLOYMENT IN THE DALLAS FORT WORTH METRO AREA?
According to the Bureau of Labor Statistics’ latest report from November 2023, the unemployment rate for the Dallas Fort Worth area is at 3.9% which is still near multi-year lows, though it did tick up. So to our point earlier, loss of jobs could definitely be a reason for a severe housing market crash in Dallas Texas, but there are no indications this is a current possibility.
One note though on employment, take a look at the annual salary increases are slowing down, when the cost of living has not really been going down. This does in fact play into the affordability of purchasing a new home, which could take some prospective buyers out of the market.
So in short, many homeowners locked into historically low-interest rates if they purchased prior to 2021 have no incentive to sell and have plenty of equity in the home to weather a severe storm. As long as they keep their jobs, then no reason to sell right now, which keeps supply down as well. This will negate the dropping demand due to the cyclical nature of the housing market in Dallas TX.
Dallas Texas Economic Overview November 2023
Dallas Metro Annual Changes in Salary
Are Home Owners in Distress and Need to Sell?
Another possible reason the market could tank is if homeowners did not have reserves to weather a possible downturn in the economy. Looking at the Federal Reserve Households Equity in Real Estate, which provides us with valuable insights into the state of home equity, it is evident that home equity is currently near its highest point since the 1940s, having successfully rebounded from Q1 2023. This is a stark contrast to the recession of 2008, where homeowners faced significant challenges due to the lack of equity and less conservative lending regulations at that time.
In the event of an uptick in job losses caused by a recession, the reserves built up by homeowners allow them the option to sell their homes and still retain a substantial amount of money, thus avoiding the need for short sales or foreclosures. Additionally, homeowners can tap into their accumulated equity to sustain themselves until they secure employment or until the recession subsides, and the cycle of quantitative easing and easy money begins anew. This availability of reserves provides a safety net for homeowners, enabling them to navigate potential economic downturns with greater financial stability.
There is much speculation about the housing market collapse. However, looking at the facts, there is currently no indication of a significant downturn unless there is a massive economic shift with a surge in layoffs or if interest rates continue to rise, making it even more challenging for many to afford a home. Although, we must not overlook the possibility of a decline in the upcoming months. As we move into the new year, the housing market may experience a slight decline, but as spring begins, home prices will likely rise again. If interest rates start to decrease, we may see an even stronger buying season next year. Time will tell as history tends to repeat itself. Therefore, during these uncertain times, let's cherish our time with loved ones, count our blessings, and find gratitude, even in the face of challenging circumstances. Let's remain hopeful and keep our spirits high until we gain a clearer picture next month.
