Welcome to 2023!

I hope that you had a great Christmas and New Year.

There has been quite a bit of speculation over the past couple of months about what the 2023 real estate market would bring (I shared the latest expert forecasts in this recent post).

Locally, our market has been showing signs of stabilizing and my mortgage partner let me know that new mortgage applications increased at the end of 2022 and into the first week of 2023.

When mortgage rates jumped last year, many potential buyers put their home-buying plans on hold and adopted a “wait and see” approach. As a result, new homebuilder incentives made a return and those have continued into 2023.

For the latest local market data and information on some of the best new builder incentives, watch the following video or continue reading below;

Frisco and Prosper Market Update

If you’ve been following my blog posts or seen any of the videos I’ve put out over the last couple of months, you’ll know that our local real estate market has been in a state of flux.

Home prices peaked in April in Frisco and May in Prosper. Following the peak, the median sales price fell 17% in Frisco and 14% in Prosper before leveling out by the end of August and have essentially been treading water since then.

While many potential buyers are wondering, even hoping, that home prices fall further, there's nothing in the available data currently to indicate that's going to happen.

I'm not saying they can't, or won’t, just that none of the leading indicators are pointing in that direction currently.

Personally, I think we're going to see pricing remain relatively flat in 2023.

Could that change? Absolutely. Much will depend on what happens with mortgage rates and the economy overall.

One thing that is becoming clear is the housing market will vary depending on where in the country you live.

The economy here in North Texas remains strong and I haven’t seen any reports, or forecasts, indicating we will see a deep, or long-lived recession locally. In fact, all of the planned major construction projects are continuing to move forward as planned with new ones being announced.

Supply Remains Low

The main reason home prices have stabilized is that supply remains very low against current levels of demand.

When mortgage rates rose above 5.5% in 2022 we saw buyer demand pull back sharply. The result was the falling home prices we saw throughout the summer.

The new home builders, and traditional sellers, responded by offering closing costs assistance and mortgage rate buydowns. Those incentives, coupled with falling mortgage rates in the fall, helped bring stability back into our local market.

Housing supply can only come from one of two places, existing homes or new construction.

The vast majority of current homeowners have fixed-rate mortgages below 4%, with many in the high 2% or low 3% range. For those homeowners, there would have to be a compelling reason for them to willingly sell and buy a new home with a 6% or 6.5% mortgage.

While there will always be homeowners that need to sell due to job relocation, divorce, growing family, downsizing, etc. there are fewer that will sell and move “just because” which is likely to keep supply low throughout 2023.

That leaves new construction as the other alternative for more supply.

New Construction Opportunities

Regardless of the overall economy, or mortgage rates, new home builders have no choice but to continue building and selling homes. While they might delay some projects. many of the incentives we have seen are a direct result of homes that were already in the pipeline.

During Covid, supply chain disruptions caused new home build times to more than double in many cases. Everything from brick, weatherproof sheathing, windows, and HVAC equipment was delayed. Just as those kinks were starting to get worked out, mortgage rates spiked, contract cancelations went up, and for the first time in a couple of years, the new home builders were starting to have unsold inventory.

As a result, the builders introduced incentives in an effort to keep product moving. It’s working as new home sales have continued at a strong, albeit slower, pace.

The incentives being offered include price reductions, closing cost assistance, mortgage interest rate buy-downs, and free or discounted upgrades.

I’ve seen price reductions of up to $200,000 on completed homes, $20,000 or more towards closing costs, below-market mortgage rates of 3.99%, 50% off design center upgrades, included washer/dryer packages, and more.

The incentives vary from builder to builder and community to community. We’ve been able to negotiate additional incentives over what’s publicized for many of our clients as well.

As more new communities come online, including the highly anticipated Fields Community, Lexington, and the expansion of The Grove, these incentives are likely to continue for the foreseeable future.

For the latest information on the best opportunities and incentives available in the area/community of your choice please give me a call at 469-296-5230 or send me an e-mail.

New Construction Homes in Frisco and Prosper