Talk of a housing market meltdown, or crash, has been with us since last fall, leaving many potential buyers and sellers wondering when it’s going to happen.

With summer right around the corner, and mortgage rates remaining stubbornly high, should we expect the Frisco TX housing market to have a meltdown, or will the market heat up just like those summer temperatures?

Watch the following video, or continue reading below, to find out what the latest numbers tell us about where this crazy Frisco TX housing market is heading;

The Housing Market Crash That Wasn’t

Last fall, there was no shortage of expert predictions of a housing market crash, or correction.

Jeremy Siegal, Russel E. Palmer Professor Emeritus of Finance at the Wharton School of Business said:

I expect housing prices to fall 10% to 15%. Housing prices are accelerating on the downside.

Mark Zandi, Chief Economist at Moody’s Analytics:

Buckle in. Assuming rates remain near their current 6.5%, and the economy skirts recession, then national house prices will fall almost 10% peak-to-trough. Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession.

Goldman Sachs:

Housing is already cooling in the U.S., according to July data that was reported last week. As interest rates climb steadily higher, Goldman Sachs Research’s G-10 home price model suggests home prices will decline by around 5% to 10% from the peak in the U.S……
Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests.

Consumer Confidence Rattled

Without a doubt, headlines and predictions such as these have rattled the confidence of potential buyers and sellers.

I’ve had several calls with potential buyers over the past few weeks all asking similar questions about the future of home prices and what I think home prices here in the Frisco area are going to do over the next 6 to 12 months.

I certainly don’t pretend to have a crystal ball. My goal is simply to share the latest information and help you interpret that information, so you can make the best decision for you and your family.

Goldman Sachs, in a recently released report, explained:

The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. House prices are defying expectations and are rising in major economies such as the U.S….

Personally, I don’t think we will see any meaningful declines in home prices here in Frisco for the remainder of this year.

The labor market continues to be stronger than expected and, even with higher mortgage rates, which we should start to see decline now that a debt ceiling deal has been reached, the imbalance between supply and demand is enough to keep home prices from falling.

Home Prices Past, Present, and Future

Let’s take a look at the most recent local home price information:

After peaking in April 2022 at $760,000, the median sales price in Frisco fell to $630,000 by October 2022, before climbing back to $714,320 in December 2022.

The median sales price in 2023 has remained between $650,000 and $700,000, besides the drop in February caused by homes closing that went under contract at the low point in the market.

It’s important to point out that sales price data is a look back at what was happening in the real estate market. It’s a lagging indicator. Sales that closed in May went under contract in March and April. The data is telling us what the market was doing.

While that’s useful, in order to understand where the market is heading you also need to look at the current list price trend and factor in the original list-to-sales price ratio.

There are other factors we can look at, but these two will serve as a good example in helping us determine where the market is heading.

This graph shows us the trend in median list prices here in Frisco:

The dotted line represents the weekly changes, which are always more volatile, while the solid line shows us the 90-day trend.

Since March, the overall trend for new list prices has been going up.

Notice the dotted line does come back down on the far right side of the graph in response to slightly less demand over the past couple of weeks as mortgage rates hit 7% once again,

We all know that anyone can list a home for sale at any price, but how close to the list price are homes actually selling?

This graph shows us the original list price to sales price percentage:

As you can see, since the beginning of the year the list price to sales price percentage has been rising. In April it was 99.8% and in May it was 100%.

Considering the median list price has been rising, this tells us the median sales price will also rise in the months ahead as these homes will appear in the closed sales data in July and August.

Bottom Line

There is nothing in the data currently to suggest that home prices here in Frisco, or the surrounding area, will decline in any meaningful manner in the months ahead, except what we normally see seasonally. Prices usually rise in the first half of the year before coming back down in late summer and fall.

If you’ve been considering buying or selling a home and want to discuss the market in more detail, please Schedule a Call. There’s never an obligation and I’d be more than happy to speak to you.

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