Zillow recently released the results of their research to give us the answer.
Two Texas cities made the list of “Top Ten Best Seller’s Markets,” while none made the list of buyer’s markets. San Antonio came in at #3 while Dallas/Fort Worth is #10. Our own research shows that several other Texas cities are experiencing seller’s markets. Austin and Houston are two examples.
So what constitutes a seller’s market?
In Zillow’s analysis, a seller’s market was not necessarily defined as one where prices are rising (although they are), but as one where homes are selling faster, and at prices near, at, or even higher than their listing price.
In a buyer’s market, homes are for sale longer, price reductions are frequent, and buyers are more likely to be successful with an offer at less than full price.
What causes homes to sell faster and at full price? The Law of Supply and Demand, working in an area with a shortage of homes for sale.
In a balanced market, an area will have about 6 months’ worth of inventory. This is determined by dividing the number of homes currently for sale by the average number of homes sold per month over the preceding 12 months.
As of February, San Antonio had about 4.2 months’ worth of available homes. In January Austin had only 2 months’ supply, while Houston has remained constant with 2.6 months’ inventory since December. The number of homes for sale in the Dallas area is at an almost 20 year low, with less than a 3-month supply.
If no more homes were listed, these cities would be “out of houses” before July.
Texas may be on its way back to a balanced market…
As prices and demand rise in any city, the balance begins to shift. More homeowners are willing to offer their homes for sale and builders once again have the confidence to develop new neighborhoods. As a result, inventory levels increase and begin inching toward the 6-month benchmark that indicates a balanced market.
This would happen faster if not for the Catch 22. While homeowners may be more willing to sell as prices rise, many who want to remain in the area still hold off simply because they’re afraid they won’t find a new home to buy.
That fear should dissipate as Texas home builders get back into full swing with new construction and take the pressure off existing home sales.
Days on the market statistics can mislead buyers…
All of these cities are recording reduced numbers of days on the market. East Dallas, for instance, is showing 45 days on the market, while North Texas as a whole is showing 64 days on market.
Buyers shouldn’t be misled by those numbers. They don’t mean that buyers have 45 or 64 days in which to look and choose. Properly priced, well-presented homes in these low-inventory markets typically receive multiple offers within 4 or 5 days of appearing in the local Multiple Listing Service.
The good (make that great) news: In spite of rising prices, Texas is still one of the most affordable places in the U.S. to live.
According to Zillow, the median price of homes that sold in Dallas–Fort Worth in January was $162,129, the median home value in Houston was $135,200, and the median price of homes currently listed in San Antonio is $165,000.
Meanwhile, the median home price in Miami was $305,500, in Los Angeles County $443,000, and in San Jose, $593,750.
If you’re ready to become a Texas homeowner, call the Clover Mortgage Group today at 1-800-2232-7409 or apply on line at http://www.mikeclover.com. We’ll be happy to get you pre-approved and ready to make a solid offer the minute you find your new home.