Finding a beautiful house in Texas was never too easy, especially when looking for affordable options. But the pandemic has changed every aspect of life, including buyers’ and sellers’ preferences. The same has happened in the Texas housing market, and it has become affordable and approachable. People who never had thought of purchasing a house
Finding a beautiful house in Texas was never too easy, especially when looking for affordable options. But the pandemic has changed every aspect of life, including buyers’ and sellers’ preferences. The same has happened in the Texas housing market, and it has become affordable and approachable.
People who never had thought of purchasing a house in Texas started searching for their dream house during the pandemic. Not to mention, they realized the need for bigger, open, and comfortable spaces after living indoors for months. But there are several other factors that encouraged people to look for homes in Texas. No matter what the reason is, the demand is now more than the supply.
As a result, the Texas market is seeing changes since the start of the pandemic and continues to observe ups and downs for some time. Read the article further to get an idea of why the housing market has changed and what you can expect now.
Texas Housing Market: What is Fueling the Surge?
There are several reasons for this rising demand, including the record low mortgage rates. This has encouraged many renters to become buyers. However, we also need to consider millennials, who are maturing. Most of them are in their mid-30s and have managed to do savings during the pandemic.
Plus, relocations to find new jobs are also fueling the surge, as many people are moving to Texas from around the country. In other words, Texas’ market trends have been changing since the start of the COVID crisis. As experts are emphasizing spending more time indoors, people are searching for bigger spaces instead of living in small rental homes. You should also know that many companies are relocating and encouraging their employees to work from home. This forces them to create workstations in homes, and they need space for that.
Because of all these reasons, the demand has increased significantly. But Texas housing market doesn’t have enough supply to facilitate each prospective buyer in the line.
The average mortgage rate of 30 years till 2020 was around 3.75%. However, it started to drop at the beginning of the pandemic in March and increased briefly in April. After that, it dropped gradually throughout the year, showing record low rates.
You should also know that rates are rising again. Government institutions have passed another financial stimulus and the economy is getting towards stability. Also, the increase in employment opportunities will also increase the rates more.
Experts also believe that the housing market will face countervailing forces of the pullback of increased mortgage rates and a higher push of opening of new jobs. Well, you have to wait for a while to notice which force will win the market. It is important to keep in mind that in 2018, the country saw a surge in employment rate. However, the housing market had significantly dropped due to mortgage rates of 4% at the beginning of the year and 4.6% rate at the end of 2018.
Surprisingly, Texas average home prices have been increasing for six consecutive months, accelerating 19.3% YOY, which was $298,013 in June. The compositional sales in Texas’ market result in higher prices of homes, which leads to higher average prices. You may also want to know that a great number of luxury houses in Austin, including Texas, are sold since the last year. This sale has contributed to the 43.2% YOY rise in the median price, which is $465,900. In this case, the Dallas metric has risen to 22.0%. When it comes to Forth Worth, it has increased to 21.7% after 23.6% growth in the previous month. San Antonio and Houston’s metrics elevated 15.7% and 19.4%, respectively.
In addition to that, the Texas Repeat Sales Home Price Index shows corroborated unsubstantial and substantial home price appreciation and compositional price effects as the index rises to 13.3% YOY. You also need to know that the metric skyrocketed to 36.0% in Austin, followed by North Texas with annual property price appreciation at 15.3% and 16.7% in Forth Worth and Dallas, respectively.
Keep in mind that San Antonio has seen a 12.9% annual hike, whereas Houston’s index has shown double-digit growth for the very first time since 2014, raising to 10.2%. This way, increases in prices will outpace wage gains, which will make houses more expensive and unaffordable.
In a nutshell, you can expect a significant rise in mortgage rates and house prices in the coming months. Plus, you might find it hard to get your hands on the right property due to the lower supply. If you want to learn more about the Texas housing market or other real estate markets, you can check I Need House Info to dig a bit deeper and make an informed decision.