If you were frozen out of the local housing market due to rapidly rising prices, multiple offers, and bidding wars is now the time for you to consider getting back in, or should you wait until next year?

In this blog post, I share the latest market data to show you exactly what’s going on in the Frisco and Prosper housing markets as the media reports and headlines often don’t tell the entire story.

I share this information not to convince you one way or the other, but to provide you with the information you need to make the decision that’s right for you and your family.

Continue reading below, or watch the following video, to learn more;

Over the past couple of weeks, I’ve spoken to several home buyers that I worked with earlier this year, and last, that were frozen out of the housing market due to the craziness that was going on with multiple offers and bidding wars. Even though mortgage rates have jumped significantly, many are wondering if now is a good time to consider getting back in.

The concern, for many, is that home prices will continue to fall and they don’t want to overpay, or it’s not as affordable now due to the higher mortgage rates. It’s a legitimate, valid concern.

The truth for many is that paying $100,000 over the list price with a 3.5% mortgage rate was more expensive than buying a home today at 7%. The real question is whether home prices will continue to fall.

Here is what Odeta Kushi, Deputy Chief Economist for First American recently said;

Nobody knows for sure what home prices are going to do over the next year and that’s what Odeta is referring to. It’s impossible to time the market perfectly. People that bought homes in Frisco and Prosper in April and May of this year didn’t realize at the time they were buying at the peak of the market.

Odeta is saying if you find a house that meets all of your criteria and it works for you and you can afford it, buy it. If it doesn't, don't. But if you're sitting on the fence thinking that prices are going to tumble further and you're going to get a much better deal a year from now, maybe you will, maybe you won't.

So the question becomes, what do you do? How do you make this decision?

What I can tell you is there a lot of information out there right now based on fear and very little fact. Most of media is reporting national numbers and not what is happening here in our local market.

As you may, or may not know, I release a market update every week with the latest housing market data allowing you to spot trends long before they are reported in the media. Here is the latest report for Frisco, but you can search any city or zip code in the country right from that report.

Where you get your information matters when trying to make the best decision for you and your family. Jason Lewris, Co-Founder and Chief Data Officer over at Parcl, said it best;

Jason hits the nail on the head here. My goal is to provide you with the trustworthy advice you need. I won’t spread fear and I won’t tell you everything is rosy when it’s not.

The current market offers opportunities we haven’t seen in a couple of years now. You don’t have to waive appraisals, and contingencies, or bring extra cash to closing. You can request the seller make repairs and you can receive closing cost assistance to help buy down the mortgage interest rate. In other words, it feels like a normal market.

Saying that, now might not be the right time for everyone to consider buying. Mortgage rates are challenging affordability and economic uncertainty has many uncertain and apprehensive.

Update Frisco and Prosper Market Data

Home Prices

The graph above is tracking the median sales price of homes in Frisco and Prosper over the past year. Frisco is represented by the blue line and Prosper by the red line.

Home prices peaked in Frisco in April and Prosper in May.

Since April, prices in Frisco are down 18%. In Prosper, prices are down 16% since May.

Even though prices have fallen, they are still up 12.5% year-over-year in Frisco and 21.5% year-over-year in Prosper.

Looking at the far right side of the graph you’ll notice that pricing has held fairly stable for the past couple of months. That will be something to keep an eye on and might indicate the bulk of our price declines are behind us, behind what we normally see in the 4th quarter due to seasonality, and that our market has found some balance.

While I do expect the annual pace of appreciation to continue to fall, the latest market forecasts from Wallet Investor and Zillow show our local markets could see price appreciation of up to 5% next year.

The Impact of Rising Mortgage Rates

Home prices overall are directly impacted by supply and demand. Over the past couple of years, we saw demand skyrocket against limited supply, resulting in rapidly rising home prices.

The steep rise in mortgage rates caused buyers to pause impacting the demand side of the equation. That can be seen most clearly in the drop-off in pending home sales (homes under contract but not yet closed).

Since the markets in Frisco and Prosper peaked in April and May respectively, the number of homes going under contract has steadily fallen.

We saw a brief uptick over the summer as mortgage rates recovered a little, but once they started rising again pending home sales declined.

Inventory

On the supply side of the equation, the common belief was supply would increase rapidly as demand fell putting additional downward pressure on home prices.

That is exactly what we saw after the initial jump in mortgage rates. As a result, sellers that had to sell were forced to make price reductions and the result was a drop in the median home price from the highs in April in May.

By mid-summer, supply started to flatten though, and didn’t increase as much as initially expected as shown on the following graph;

Supply started to flatten out in July and, as shown in the first graph, prices started to stabilize in August, hence the reason our local market has shown some balance.

Inventory and prices normally decline in the 4th quarter so we will have to wait and see how this plays out through the end of the year.

If we see inventory start to climb in late January and prices hold stable or increase slightly, that will be an indication that housing market conditions in 2023 will be more representative of a normal market.

Bottom Line

Frisco was recently named one of the most recession-proof economies in the country due to the continued inbound migration, corporate relocations, available workforce, and unemployment rate. Based on that, and what we are seeing currently, it doesn’t appear as though our housing market will be impacted as much as other areas of Texas or the country.

If you would like additional information on new home builder incentives or want to discuss your specific situation in more detail, please don’t hesitate to schedule a call. I’d be happy to provide additional insights and information to help you make the best decision for you and your family.