Rising interest rates have some people convinced that home prices will start to drop. Will that happen here in Dallas?
For starters, it's important to remember that interest rates are just one factor that can affect home prices. Other factors include the strength of the economy, population growth, and housing supply and demand.
In Dallas we have a strong economy with businesses constantly relocating their headquarters to Dallas because of the talent pool, low cost of living, and lack of a state income tax. The population is also growing rapidly. According to the latest census data, Dallas is the third fastest-growing city in the United States. In fact, 300 people move to Dallas every day! That's a lot of new people looking for homes. And, as we all know, demand drives prices.
There is also the issue of supply. Right now, there is a lack of housing inventory in Dallas. The number of available homes for sale is way down compared to last year. This is especially true for entry-level and middle-priced homes. The combination of strong population growth and limited supply is pushing prices upward, even in the face of rising interest rates.
Now what about higher priced homes? The higher the price of a home the less people there will be who are qualified to purchase it. So, if interest rates go up, we may see prices start to level off or even dip a bit in the luxury home market.
But, to sum it up, rising interest rates are not likely to cause a decrease in home prices across the board in Dallas. The entry level and middle priced homes will continue to see prices go up due to population growth and limited supply. Higher priced homes on the other hand, may see a leveling off or slight decrease in price.
This presents an amazing opportunity for the seller-buyer. He can sell his home in a strong seller's market with massive demand. Then he can take that equity into the luxury home market where he will have a strong negotiating edge with less buyers. Selling in a seller's market and buying in a buyer's market. It definitely sounds like a win-win!
Is now a good time to buy? Well, demand for entry level and middle-priced homes will continue to drive prices up and buyers can have a real edge in the luxury home market. That sounds like a good time to buy to me!
P.S. If you're thinking of buying or selling a home in Dallas, we'd love to help you out. Just shoot us an email or give us a call!