North Texas homebuyers were already facing the challenges of rising prices and limited inventory as the housing market headed into 2018. Home affordability has been an issue for many homebuyers and especially for first-time homebuyers and young families. Now another negative to home affordability is a reality as mortgage rates are starting to rise. Analysts forecast home loan rates to rise from below 4 percent to 4.5 percent or more in 2018 and for the trend to continue in 2019. The end result is that housing finance costs will reach their highest level since 2010!
Because less and less North Texas builders are building entry level and a therefore more affordable homes and the median price for new houses reached $345,000 at the end of the year, there is and will be an affordability concern in 2018. The market wants $200,000 homes and that is where the inventory is needed most, but rising land prices and construction costs prevent that from happening.
My point is that if becoming a new home owner or moving up to a bigger or newer home is in your plans, then do not wait. Everything that affects the affordability and price of purchasing a home are rising and are expected to do so through the end of the year. Higher home prices and higher mortgage rates equals less affordability.
Sources: Core Logic, The Dallas Morning News
Steve Lester, REALTOR® is with Keller Williams Realty living in Allen, Texas.