If you're considering buying or selling a home this year but you're unsure about where the real estate market is heading, or if now is even a good time, then you are in the right place. In this market report, I will dive behind the headlines and share what I am actually seeing in the marketplace to give you the information you need to make the best decision for you and your family.

National Real Estate Market Overview

To lay the groundwork, let's start with a general overview of the national real estate market.

Inventory Levels: Inventory, or the number of homes for sale, continues to rise and is up year-over-year in virtually every market across the country.
Mortgage Rates Remain High: Despite forecasts of lower rates, the Federal Reserve’s efforts to control inflation have led to significantly higher mortgage rates.
Rising Home Prices: Despite the high mortgage rates, home prices have continued to climb. Lawrence Yun, Chief Economist at the NAR noted that “over 90% of metro areas are experiencing home price growth.”

Why Are Home Prices Still Rising?

The headlines have been full of reports about how much housing inventory has grown, as shown on the following graph:

While the headlines have capitalized on the rising inventory percentages, they often aren’t telling the whole story. While it’s true we have more homes for sale now than at any other time over the past few years, inventory is still far below pre-pandemic levels in the majority of the country.

Here’s the same graph as above, adding the years prior to the pandemic:

As you can see, we still have a long way to go.

Depending on which study you look at, it is estimated that we need between 1.5 and 2 million homes to come on the market in order to bring the market back into balance. Markets that have a lot of new construction activity, like we have here in Frisco, will likely see less aggressive future price appreciation than those without much new construction activity.

While resale inventory is up 68% year-over-year in Frisco, new construction inventory is up 107% in the same time period.

Saying that, inventory is only one half of the equation when it comes to home prices, the other half being demand. While it’s true that supply has been increasing, it hasn’t been increasing enough to satisfy demand, even in the face of higher mortgage rates.

The Impact of Mortgage Rates

Mortgage rates remain a significant factor in current market dynamics. The Federal Reserve's efforts to control inflation have led to higher mortgage rates, which have deterred some buyers. However, many potential buyers are also potential sellers, meaning that the decision to wait impacts both sides of the market. Despite higher rates, the market's resilience shows there is still substantial demand for homes.

As such, although the home price appreciation expectations for 2024 have recently been revised down, all of the major entities are still forecasting national price appreciation this year, although Freddie Mac seems to believe prices will end the year relatively flat;

Frisco Market Insights

Frisco and the immediate surrounding areas, are unique compared to many areas of the country. Although we have seen inventory climb, thanks in large part to the tremendous amount of new construction in the area, demand has remained fairly high due to the number of people relocating to this area.

Even so, signs of a shift, or a cooling, are starting to emerge. Now, before you get excited, or nervous, depending on which side of the coin you are on, the cooling I am referring to has nothing to do with a crash or significant drop in prices, but rather a return to more balanced market conditions. This is based on what I am seeing in the leading indicators currently.

3 Market Trends to Watch

Here are the 3 metrics to keep an eye on in the coming months;

Inventory Levels: Continued increases in inventory could eventually lead to more balanced market conditions.

Median List Price: The median list price is a good leading indicator of where home prices will be in the future. The vast majority of sellers in the market today are not "testing the water" but want to sell. As such, homes are being priced competitively.
Percentage of Price Decreases: Price decreases happen as a normal part of all markets, but if you start to see the percentage of price decreases go up, especially if combined with a decline in median list prices, this could be an indicator of softening home prices.

The best, and easiest way to track these trends is with my Weekly Market Report. Here is a link to my Frisco Market Report. If you want to see the latest trends for a city or zip code other than Frisco, you can do a search and see the latest trends for any city or zip code in the country.

Here in Frisco, we are seeing inventory levels rise, but the percentage of price decreases is falling, and median list prices are holding steady, which is an indication of a market starting to see more balanced conditions.

For a more detailed analysis and to learn what all of this means if you are planning on buying or selling, be sure to check out this month's market update video;

Despite the headlines, the market is shifting but not turning down. Conditions are stabilizing, but a lot of activity is still present in the market.

Thank you for reading this month's market update. If you have any questions, please Schedule a Call. During this no-obligation 30-minute discovery call, I’d be happy to provide you with additional information and share insights specific to your situation.