The Sizzling Market of Early 2022
At the start of 2022, the real estate market in Fort Worth, Texas, was incredibly active. Buyers were touring numerous homes, making multiple offers, and often facing tough competition. This period was marked by intense bidding wars, with properties frequently selling for much more than the asking price.
Interest Rates: A Key Factor
The Sharp Rise in Rates
One of the biggest factors affecting the real estate market is interest rates. In January 2022, rates were at 3.11%, but by June, they had risen sharply to around 5.09%. This increase was more rapid than many expected, causing a shock in the market.
The Effect of Rising Rates on Buyers
Higher interest rates have two main effects on buyers. Firstly, they reduce the amount a buyer can afford when pre-qualifying for a home loan. Secondly, they may require buyers to have a higher income to qualify for the same loan amount. These changes have led some buyers to hurry up their home search, while others have been priced out of the market.
Current Trends in Fort Worth Real Estate
Despite the rising interest rates, the demand for homes in Fort Worth remains high. The city continues to attract many people from other states and areas. However, the nature of bidding wars has changed. While homes are still selling above their list prices, the overage is not as extreme as it was earlier in the year.
The Localized Nature of the Market
It’s important to remember that the real estate market varies greatly even within a single city. Different areas in Fort Worth can have significantly different selling prices over the list price.
A Real Example
For instance, a recent client bought a home listed at around $425,000. Despite the changing market conditions, this property received over 11 offers and sold for $30,000 above its list price. This shows that, while the market may be cooling somewhat, it remains competitive.
The Bigger Picture: Mortgage Applications and Market Cooling
Decline in Mortgage Applications
Another sign of change in the market is the decrease in mortgage applications. With higher interest rates, fewer people are applying for new mortgages or refinancing. This decline suggests that some potential buyers are waiting for the market to cool further.
What the Experts Say
Experts like Daniel Hale, chief economist at realtor.com, believe that while the market is showing signs of a new direction, it remains largely favorable to sellers in many areas.
Inventory Levels: A Key Indicator
From Extreme Seller’s Market to Seller’s Market
In February 2022, Fort Worth had an inventory level of 0.6 months, meaning it would take just over half a month to sell all listed homes if no new homes were listed. By May, this number had risen to 1.2 months. While still indicative of a seller’s market, this shift points to a slight easing.
Conclusion: Still a Good Time to Buy
Despite the changing dynamics, buying a home in Fort Worth remains a sound decision. Home values are expected to continue rising, making it a beneficial investment. For example, a $300,000 home could cost an additional $27,600 next year. It’s a market with opportunities, whether you’re buying your first home or seeking a new investment.
