Million Dollar Question - Buy or Wait? 2022 Edition (Dallas, Denton: move, housing market)

[Xalistiq]

The just-published State of the Nation’s Housing 2022 white paper by Harvard University finds that with 7% down, the monthly mortgage payment on a median-priced home would be $2,020 as of April 2022.

“In combination with rising prices, the recent interest rate hikes raised the minimum income needed to afford these payments from $79,600 in April 2021 to $107,600 in April 2022 - effectively pricing out some 4 million renter households with incomes in this range,”.

https://www.jchs.harvard.edu/sites/d...using_2022.pdf

Keep in mind, throughout the month of April, 30-year interest rates were in the mid-to-high 4% range. Rates are now 6%+ for the vast majority of buyers.

Rates are surging so quickly that in late June a $107,600 income threshold is not enough to buy an average home if we use the same assumptions made in the report, just two months later.

As of 2022, only around a third of US households earn more than $100,000, according to IBISWorld and that number is much lower for first time home buyers: https://www.ibisworld.com/us/bed/hou...an-100-000/35/

[Wittgenstein's Ghost]

Originally Posted by Xalistiq

The just-published State of the Nation’s Housing 2022 white paper by Harvard University finds that with 7% down, the monthly mortgage payment on a median-priced home would be $2,020 as of April 2022.

“In combination with rising prices, the recent interest rate hikes raised the minimum income needed to afford these payments from $79,600 in April 2021 to $107,600 in April 2022 - effectively pricing out some 4 million renter households with incomes in this range,”.

https://www.jchs.harvard.edu/sites/d...using_2022.pdf

Keep in mind, throughout the month of April, 30-year interest rates were in the mid-to-high 4% range. Rates are now 6%+ for the vast majority of buyers.

Rates are surging so quickly that in late June a $107,600 income threshold is not enough to buy an average home if we use the same assumptions made in the report, just two months later.

As of 2022, only around a third of US households earn more than $100,000, according to IBISWorld and that number is much lower for first time home buyers: https://www.ibisworld.com/us/bed/hou...an-100-000/35/

According to Texas Realtors, the average income of home buyeres in 2021 was $112,500.

I don't disagree that the housing market is getting awfully frothy, but you're making the wrong comparison here. It has rarely (if ever) been the case that the median income person could buy the median house.

Page 3: https://www.texasrealestate.com/wp-c...lersReport.pdf

[loves2read]

Originally Posted by Xalistiq

The just-published State of the Nation’s Housing 2022 white paper by Harvard University finds that with 7% down, the monthly mortgage payment on a median-priced home would be $2,020 as of April 2022.

“In combination with rising prices, the recent interest rate hikes raised the minimum income needed to afford these payments from $79,600 in April 2021 to $107,600 in April 2022 - effectively pricing out some 4 million renter households with incomes in this range,”.

https://www.jchs.harvard.edu/sites/d...using_2022.pdf

Keep in mind, throughout the month of April, 30-year interest rates were in the mid-to-high 4% range. Rates are now 6%+ for the vast majority of buyers.

Rates are surging so quickly that in late June a $107,600 income threshold is not enough to buy an average home if we use the same assumptions made in the report, just two months later.

As of 2022, only around a third of US households earn more than $100,000, according to IBISWorld and that number is much lower for first time home buyers: https://www.ibisworld.com/us/bed/hou...an-100-000/35/

That’s why Builders’ Magazine has so many articles about home companies building rent to own developments….they have to keep building homes or die on the vine—so to make sure the buyer pool is large enough they are now building rent-to-own communities…
I can’t think of anything that will likely become a blight than an entire neighborhood of rent-to-own homes…

[Kenro911]

Average 2 bedroom apartment rent price in DFW is $2500. Now walk me through the numbers on that one, for a family with at least 2 cars and 2 kids.

[Xalistiq]

Originally Posted by Wittgenstein's Ghost

According to Texas Realtors, the average income of home buyeres in 2021 was $112,500.

I don't disagree that the housing market is getting awfully frothy, but you're making the wrong comparison here. It has rarely (if ever) been the case that the median income person could buy the median house.

Page 3: https://www.texasrealestate.com/wp-c...lersReport.pdf

“Awfully frothy” does not accurately portray the dire, unprecedentedly high median home price/median income ratio in the US right now.

”Historically, an average house in the U.S. cost around 5 times the yearly household income. During the housing bubble of 2006 the ratio exceeded 7 - in other words, an average single family house in the United States cost more than 7 times the U.S. median annual household income.” — Longtermtrends.net

https://www.longtermtrends.net/home-...-income-ratio/

As late February 2022, the median home price/median income ratio was 7.9, according to the above link.

Not only are home prices significantly more expensive in 2022 than they were at the peak of the last housing crash, the cost of everything else has gone up in proportion to median household incomes.

Between 2006 and 2008, the dollar had an average inflation rate of 3.34% per year, producing a cumulative price increase of 6.80%. https://www.officialdata.org/us/infl...008&amount=100

Compared against average inflation rate of 6.27% per year between 2020 and today, producing a cumulative price increase of 12.94%. https://www.officialdata.org/us/infl...020?amount=100

Which means that over the past two years, the rate of inflation is nearly double what it was at the peak of the last housing bubble, and worse, inflation is expected to remain high for the foreseeable future.

The decline coming to the housing market is going to be of epic proportions. The worst affected will be those recent buyers who FOMO’d into this overvalued housing market and agreed to pay significantly over asking.

[ThomasCrown]

I don't think there's going to be much of a decline around here. We still have a shortage of homes for people who want them, and the number of people who have bought at the peak this time is far outweighed by the number of people who are sitting on the sidelines and refusing to list their home because even if they would get a great price for it, they have nowhere to go.


With higher interest rates, that problem is only going to get worse, not better, so we're going to have pent up demand for the foreseeable future and little supply.

[Xalistiq]

Originally Posted by ThomasCrown

I don't think there's going to be much of a decline around here. We still have a shortage of homes for people who want them, and the number of people who have bought at the peak this time is far outweighed by the number of people who are sitting on the sidelines and refusing to list their home because even if they would get a great price for it, they have nowhere to go.

Q
With higher interest rates, that problem is only going to get worse, not better, so we're going to have pent up demand for the foreseeable future and little supply.

Sorry, no.

If I sound like a broken record, it’s because posters continue to make unsubstantiated and false claims, even after myself and other posters have provided evidence to the contrary.

DFW does not have a housing shortage. If anything, DFW is about to have an oversupply of homes relative to demand.

There have been approximately 70,000 housing starts in DFW in 2021 and Q1 2022. DFW currently has more homes under construction than any other metro area in America, according to Dallas Morning News.

https://www.dallasnews.com/business/...outputType=amp

https://www.dallasnews.com/sponsored...outputType=amp

And this glut of new single family homes is not just a DFW phenomenon.

Nationwide, “new house starts in 2022 are 13.4% higher than their previous 120-month average. In the last 12 months, there have been 1.651 million new house starts”, according to iPropertyManagement.

https://ipropertymanagement.com/rese...starts-by-year

[hereticiam]

New home builder have started reducing prices already. This is the case in Houston and Atlanta.
I haven’t been looking at new homes in Dallas so I am not sure if it is happening in Dallas . Large builders real try hard to keep prices high. They will throw in more options, help with better rates etc. they also dilute the options they include in new homes. The fact that they have started dropping prices is a sign that they see troubles ahead. Lennar already issued a warning. Mortgage departments in many companies are doing layoffs. Reducing inflation will be a tough challenge for fed. Soft landing may not happen. Odds of recession are going up. Demand will wane, existing homes supply may also go down as sellers may want to wait it out. However new home builders will have no option but to continue building homes that are already in progress.

[Leonard123]

Originally Posted by ThomasCrown

I don't think there's going to be much of a decline around here. We still have a shortage of homes for people who want them, and the number of people who have bought at the peak this time is far outweighed by the number of people who are sitting on the sidelines and refusing to list their home because even if they would get a great price for it, they have nowhere to go.


With higher interest rates, that problem is only going to get worse, not better, so we're going to have pent up demand for the foreseeable future and little supply.

I don't know. I see a lot on the market. It's a lot more than I used to see, and it sits there longer too. I see very few that say "multiple offers received" or "offers due by" at the time they are posted. It may be a temporary blip though like I saw last summer.

[Wrecked]

30% of home are being purchased by institutional invests statewide. 50% in DFW. It’s roughly 25% nationwide. Prices won’t come down to much because institutional investors will snap up homes as they get discounted.