Buying or selling a home during the Christmas holidays apparently lacked the charm it held the year before. The number of single-family residences changing hands slipped by double-digits in December 2022 compared with the previous December, according to the Waco Multiple Listing Service.Real estate agents who spoke with the Tribune-Herald acknowledged the frenzy they faced most of 2021 and early in 2022 has dissipated. Not as many listings attract multiple offers.
Few homes, if any, are selling above the asking price. No longer do out-of-state investors buy sight unseen.One agent said the housing market is correcting itself, adjusting, and that is not necessarily a bad thing. First-time homebuyers previously priced out of the market may yet have a decent shot at home ownership. "What I would call the average homebuyer has more buying power than six or seven months ago," Bentwood Realty broker Kim Galvan said.
"Sellers are willing to make concessions. They didn't have to last year." The Federal Reserve's efforts to fight inflation by raising interest rates seven times in 2022 have reduced spending, including on homes.The Waco MLS reports interest rates began a steady climb in June and July. Between July 1 and year's end, 1,828 transactions closed involving single-family residences on fewer than 20 acres.
That compares with 2,048 transactions during the same period the previous year.In December, a home selling in Greater Waco carried an average sales price of $295,976, down from $303,659 in December 2021, according to the Waco MLS. But the December dip does not reflect a yearlong pattern. For all 2022, the average home sales price reached $318,576, considerably higher than the $284,945 norm during all 2021, again according to Waco MLS.The MLS reports 245 single-family residences sold in December, 75 fewer than the 320 changing hands in December a year earlier. "As to whether prices are trending downward, I would say perhaps slightly," Galvan said.
"There have been more price adjustments in the last three or four months than in the past two or three years. We are talking about the frenzied market of 2021 and early 2022, when there was less inventory, more buyers, and people were buying above asking price right and left. "The Texas Real Estate Research Center at Texas A&M University recognized changes in the housing market when preparing its 2023 Texas Economic Forecast, which says, "The rapid pace of rent and purchase price appreciation over the last two years was never sustainable and would have been forecast to slow even in the absence of other headwinds," those being increasing interest rates.Stoking the fire of home price growth was the fall in interest rates from 2019 through 2021, and "the mortgage interest rate's annual average will likely be higher in 2023 than it was in 2022," according to the forecast.Pam Hanson, with Coldwell Banker Apex Realtors in Waco, said she and colleagues with Apex in the Dallas, El Paso and Bryan-College Station markets found that home sales have dropped 7% on average companywide. "I've been at this 18 years, and the market definitely has been out of the norm the past two years," Hanson said. "I'm much happier to see a normal market than the chaos we've been through.
I've even had the opportunity to invest a little myself, buying two homes in recent months. "She said a neighbor expressed disappointment at falling prices. "Three weeks ago, he told me he got this much for his house, and he didn't like it. I said, 'Well, you missed it,'" referencing housing's bull market.She said would-be homebuyers still have attractive options, even with higher interest rates. She said volume homebuilders D.R.
Horton and Stylecraft offer incentives including interest rates between 4% and 5% if buyers use in-house or preferred lenders, and may also waive closing costs. "Interest rates are one factor, but a pretty significant factor," said residential veteran Trammell Kelly with Kelly Realtors. "Buyers and sellers are sitting back, saying, 'Wait a minute. This is getting a little shaky.
We're just going to park it a little while, wait and see what happens. '"Still, Kelly said he "remains very, very optimistic about the overall real estate market, specifically here in Central Texas. Rates are all over the place, but McLennan County is a different marketplace, a positive marketplace. "He said a cooling-off period may prove beneficial to real estate agents, buyers and sellers. But there may come a time when agents fondly remember the frenetic pace they kept and long for its return, he said.McLennan County Chief Appraiser Joe Don Bobbitt closely follows housing trends and sales prices.
His team will use property values as of Jan. 1 to calculate the property appraisals it mails out countywide in mid-April. "We don't get our numbers from Waco MLS, but from a third party," said Bobbitt, whose office also analyzes construction costs and replacement costs similar to what the insurance industry applies in processing claims.He said his office recognizes that prices are fluctuating due to changes in interest rates and other factors, but said he does not yet have the data to estimate if appraisals generally will rise or fall this year. US Existing-Home Sales Have Hit Bottom, Says Mark Zandi: Mark Zandi of Moody's Analytics, says US existing-home sales have hit bottom.
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