Welcome to our latest blog post, where we delve into the February 2024 Real Estate Market Update, with a special focus on Frisco and Prosper, Texas.

The real estate landscape is ever-evolving, and staying informed is key to making savvy decisions whether you're buying, selling, or just keeping an eye on the market.

In this months update we’ll take a look at the latest national trends and news, paying special attention to the latest home price and mortgage rate projections, before taking a closer look at the markets here in Frisco and Prosper.

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

National Real Estate Market Overview

The real estate market is showing promising signs of stability and growth as we step into 2024. Contrary to the predictions of a market crash in 2023, the industry demonstrated resilience with positive price appreciation across nearly all of the top 20 U.S. cities.

Nationally, the average price appreciation a healthy 5.1% year-over-year increase, signaling a return to normalcy after the unprecedented spikes in home prices witnessed in previous years.

The only market that showed declines was Portland, which saw prices decline 0.7% year-over-year - hardly a crash.

Interestingly, despite improved market conditions, a Fannie Mae survey in December 2023 revealed that 24% of Americans still anticipate a decline in home prices in 2024, although that is down from 37% in January 2023. This skepticism is understandable amidst the mix of negative news headlines and economic uncertainties. However, our goal is to cut through the noise and present you with the latest data and projections so you can make the best decision for you and your family.

Home Prices in 2024

The latest forecasts from leading financial institutions are unanimously optimistic, projecting continued home price appreciation for 2024.

While Realtor.com is the only institution forecasting price declines, it should be noted their home price forecast has not been updated since November 2023.

We fully expect Realtor.com to revise that forecast upwards in the coming weeks when their new forecast is released given that all of the other forecasts have recently been revised upwards as shown on the following graph:

Mortgage Rates: A Deciding Factor for Buyers and Sellers

The Lock-In Effect

The resilience of home prices, despite lower buyer demand and higher mortgage rates in 2023, can be attributed to the "lock-in effect." Homeowners with low-rate mortgages have been reluctant to sell, thus constraining housing supply and supporting price levels. However, as mortgage rates begin to ease, we anticipate a more dynamic market, with an increase in both buyer and seller activity.

Forecast and Impact on the Market

The outlook for mortgage rates is a critical factor influencing the real estate market's direction. After a period of volatility, experts are forecasting a trend towards lower rates, with projections suggesting a drop below 6% by the end of 2024. This anticipated moderation in rates is expected to stimulate both buying and selling activity, making it a pivotal moment for those considering entering the market.

Here is what Doug Duncan, Senior VP and Chief Economist at Fannie Mae recently said about mortgage rates:

Here is Fannie Mae’s latest mortgage interest rate projections by quarter:

Even though rates moved up this past week, on the heals of higher than expected inflation numbers, there are many experts forecasting we could see mortgage rates below 6% sometime this summer.

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A Closer Look at Frisco and Prosper, TX

Turning our focus to Frisco and Prosper, Texas, we're witnessing a tale of two markets: resale and new construction. The local dynamics offer unique insights, particularly in light of the recent shifts in mortgage rates and market trends.

The median sales price in January 2024 in Frisco was $629,000 and $883,374 in Prosper, but rather than focus on the change in median sales price we’re going to look at current pricing trends.

The median sales price is like looking in the rear view mirror and doesn’t really tell us where local home prices are heading. The homes that closed in January 20024 were listed for sale back in late September to early November, when mortgage rates were higher and the overall market was slower.

Frisco and Prosper Market Trends

In Frisco, homes are currently selling at an average of 96.5% of their original list price, while Prosper sees a slightly lower average of 95.5%. These figures indicate a strengthening market, with sellers achieving near-list prices for their properties.

Why is this important?

By looking at the current trend in list prices, and using the percentage of original list price homes are currently selling for, we can begin to get an idea of where closed sales prices will be April and May.

The following graph shows the current list price trend for Frisco. As of February 9th, the 90 day average list price was $730,411 (solid line) and the 7-day average list price was $778,830 (dashed line)

Click Here to see the complete Frisco Market Report

For Prosper, the 90-day average as of February 9th was $923,929 and the 7-day average was $934,865:

Click Here to see the complete Prosper Market Report

Despite a year marked by volatility, the latest data points to a market rebound. New listings are up 14% from last year, and with mortgage rates expected to trend downwards, we're poised for an active spring market. The anticipated moderation in mortgage rates, potentially dropping below 6% by year-end, bodes well for both buyers and sellers.

Inventory and Market Balance

Although listings are up year-over-year, the supply of homes remains tight, with Frisco and Prosper experiencing significantly less than the 6-month supply indicative of a balanced market.

As of now, Frisco has a 1.8-month supply, and Prosper has a 2.1-month supply, underscoring the ongoing seller's market. However, opportunities abound, particularly in new construction, where buyers can find exceptional deals.

See All New Construction Homes For Sale in Frisco and Prosper

The following graph shows how the number of homes for sale in Frisco currently compares to years prior:

Here is how inventory levels in Prosper have changed:

Looking Ahead: Frisco and Prosper’s Market Outlook

As we consider the interplay between home prices and mortgage rates, the future for Frisco and Prosper's real estate market looks promising. The anticipated adjustments in mortgage rates, coupled with the current trends in home prices, suggest a vibrant spring market ahead. For buyers, the potential for lower mortgage rates opens up opportunities, while sellers can benefit from the strong demand reflected in the close-to-list price sales.

Whether you're in the market for a new construction home or eyeing the resale market, understanding these trends is crucial. We're here to provide you with the latest insights and analyses, helping you make informed decisions in Frisco and Prosper's dynamic real estate environment.

Remember, this blog post is designed to give you a comprehensive overview, enabling you to navigate the market with confidence. Stay tuned for more updates, and don't hesitate to reach out with any questions or for further discussion on how these trends may affect your real estate goals.