Right now, the median home sale price in Texas is about $328,000. It sounds like a lot, but not only is that about $70,000 less than the national average, it’s also a figure that’s been ticking down in recent years as home sales have slowed down and units have been sitting on the market for longer.
In fact, the Texas Real Estate Research Center at Texas A&M University says that “conditions have shifted in favor of homebuyers” as what has historically been a spring home buying season gets underway.
Yanling Mayer, a housing economist at the research center, joined the Standard with a look at the market.
This transcript has been lightly edited for clarity:
Texas Standard: This recent report you co-authored suggests that right now we’re in a buyer’s market. A buyer’s market, or just somewhat better for buyers?
Yanling Mayer: Yeah, I would probably go with it’s just a bit better for the buyers today in this spring market.
Why is that? What’s happening?
Well, that’s a very good question, because as we know, in the last two-plus years, home buyers had been, or at least their affordability has been stuck in the rut. And we know why: because of high mortgage rates and high home prices.
In other words, the affordability crunch has … little changed in the last two years. But having said that, what makes the spring home buying season different is a supply-side story, so to speak.
When you say supply-side story, you mean there are more homes on the market for purchase?
Absolutely. So housing inventory has been building up for some time now. And what we are seeing is that in recent months, it fast accelerated to levels not seen in a long time.
Where in Texas are we seeing the fastest growth for home sales from what you can make out?
Well, to really answer that question, I want to take us back to the pandemic. We know that since the pandemic, as in elsewhere across the U.S., Texas housing market took off in the big stride.
But what really differentiated what occurred in Texas was that it was something more fundamentally driven. So yes, I’m alluding to migration and the demographic trends and the backbone for the Texas housing market.
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More people coming to Texas.
Yes, absolutely. So a lot of the trends that we are seeing now is likely a continuation of that pandemic trend. But as of lately, we are seeing fairly strong sales in cities like Abilene, Lubbock, Midland, and should I add College Station, where my employer is based.
Very interesting. These are broadly considered, I think, more secondary markets compared to, say, Dallas and Austin certainly and Houston, San Antonio. I would guess, what, because prices are better in those secondary markets?
That is correct, because we are seeing a lot of price markdowns in the secondary market, but we are seeing the same trend in the new homes market as well.
In College Station, not so much when you look at the new home sales. But yes, it’s broadly consistent because homes are selling slower. So, you are seeing discounts in existing home sales as well as in your home sales.
You can get more for your money in a place like Lubbock than you can, I would guess, in the Dallas-Fort Worth area.
Yes, absolutely. And the incoming data are also indicating a strong March home sales in border towns like Laredo and El Paso.
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What about interest rates? I was reading the other day that there had been something like a house buyer strike across the nation because people just could not deal with the interest rates, and that was forcing sellers to slash prices on resales. Has that started to ease up just a bit?
We have not seen that. What we are seeing is we are still seeing a lot of price discounts, more than one in two homes. I think the actual number is actually higher, since I don’t have the number right in front of me. There are just so many price discounts in home sales.
If we do not separate existing or new home sales, that price discount is at about $15,000 at the medium level. So in the middle of those homes with a price cut, that’s the number we are looking at.
Well, you’ve been analyzing this data for a while. And I’m curious, if you were trying to tell someone about whether or not the time is right to buy – or perhaps they should wait into the fall, when there’s less of a demand for homes, maybe, and there’s the prospect of interest rates falling – what would you say? Should people wait, or should they move in the spring?
So that’s a very interesting question. So, you know, this is a good time to time the market at this point, right? Because you have a lot of inventory and you have a lot of choices. But at the same time, rates are still high. And this expectation that rates may come down, especially with what’s going on in the stock market these days. So yeah, should you time the market.
So if you ask me to give advice, it’s just know your circumstances, right? And know your markets. And if you have to buy, take your time and negotiate, really negotiate. But if you don’t have to, you’re just kind of, you know, wait and see, yeah, I may wait a bit longer, see what really happens with interest rates.
