Houston Weekly Market Update 10/9/2023

In a rapidly changing real estate market, it's essential to stay informed and adapt your strategies accordingly. We're here to break down the latest trends, data, and insights that can help you make informed decisions. Let's dive into a recent analysis of the housing market, mortgage rates, and other factors that may impact your real estate journey.

Market Balance and Interest Rates:

As we assess the current state of the real estate market, it's evident that we're not moving towards a buyer's market anytime soon. Despite a slight increase in inventory, we're still in a seller's market, with around five and a half to six and a half months of inventory. Interest rates are expected to remain relatively low, and it's unlikely we'll see a significant drop in the near future.

Days on Market and Lockbox Activity:

One significant indicator to watch is the median days on market, which has increased from 21 to 25 recently. This metric suggests that homes are spending slightly more time on the market before getting sold. Lockbox activity, a measure of showings, has decreased by .8%. However, we're still averaging .57 showings per house per week, which is a reasonably healthy number.

Mortgage Applications and Economic Factors:

Mortgage applications saw a 6% increase, indicating pent-up demand. This surge could be due to a strong jobs report, with over 300,000 jobs added recently. Additionally, the Consumer Price Index (CPI) has shown that inflation remains around 4%. While this may not be great news, it's not as dire as some had predicted.

Supply and Existing Home Sales:

Nationally, the supply of homes is just shy of a million, a far cry from the 4 million available during the 2007-2008 foreclosure crisis. This suggests we're not on the verge of a similar downturn. Existing home sales are up 1% year-to-date, which is a positive sign that the market is stabilizing.

Home Price Appreciation and Demographics:

Homebuyer sentiment remains relatively strong, with a slight increase in consumer confidence. This indicates that people are still willing to buy homes, even with rising prices. Young adults forming new households is contributing to inventory absorption, which is a positive development for the market.

Economic Health and Mortgage Rates:

The GDP and overall economic indicators show relative health, and unemployment remains low. While the Federal Reserve has indicated potential interest rate hikes, some analysts suggest that the current high Treasury bill rates might mitigate the need for significant rate increases. However, it's essential to consider that even without hikes, interest rates will likely stay relatively high.

Delinquencies and Lending:

Delinquencies on mortgage properties are historically low, at just 2%. FICO scores remain high, indicating the overall financial health of homeowners. Although credit card debt is increasing slightly, it's not necessarily a red flag. Lending standards are tightening, so potential buyers should consider getting into the market sooner rather than later.

Future Projections and the Cost of Waiting:

Goldman Sachs has revised its forecast for mortgage rates, expecting them to be around 7.1% by the end of this year and 6.8% by the end of the following year. This suggests that we're likely in for higher rates in the foreseeable future. Waiting for lower rates might not be the best strategy, as home price appreciation and high rates could offset any potential savings.

Conclusion:

The real estate market is undergoing changes, but it's not heading towards a major crash as some may fear. With low inventory and increasing demand, home prices are likely to continue their upward trend. If you've been waiting for the right time to enter the market, it's essential to carefully consider your options. Speaking to a real estate professional can help you make informed decisions in this ever-evolving market.

As always, we're here to provide guidance and support throughout your real estate journey. Don't hesitate to reach out and discuss your specific needs and concerns.