Posted on February 9th, 2023

Real estate agents say more homes are getting multiple offers and more buyers are walking through open houses, even braving icy weather to do so.

As mortgage rates rose at a brisk pace last year while prices in North Texas were still at record highs, Harshal Bauskar’s family had to put a pause on their home search last summer.

Like many buyers across the country, they struggled to find a property that fit within their budget, and were hopeful that prices and rates would come down.

But finally in January, they found the perfect deal and purchased a home in McKinney in the mid-$600,000s with an interest rate in the 5% range.

“We waited some time, and then we got the best one,” Bauskar said, adding that buying such a big and beautiful home was a “dream come true” for him, especially being his first home purchase in the U.S.

The Bauskars took advantage of a slowing market in which home prices — while still up from a year ago — have fallen from month to month. Mortgage rates have also declined just enough to have an impact on buyers’ budgets but still noticeably higher than its record low in January 2021.

Real estate agents around North Texas say they have seen an influx of interested buyers walk through houses and make deals in January compared to the second half of last year, motivated by the changes in the market and the end of the holiday season. Buyers are also seeing more incentives from sellers in deals, which was almost unheard of when competition was at its peak.

About 6,600 homes went under contract in January, up from just over 4,729 homes in December, according to data from Realtor associations compiled by the Texas Real Estate Research Center at Texas A&M University.

Bauskar, 35, works remotely in information technology for a financial services firm and has been renting in the U.S. for 12 years after moving from India. He moved his family from Boston last July after a friend recommended North Texas, and was attracted to the region for its prices of larger homes and warm weather.

The family hoped to buy a home around Frisco or McKinney. They looked at homes for a few days after their move, but held off until November when prices and rates were finally a bit lower.

The Bauskars were among multiple bidders on the home. Harish Nehate of Re/Max Town & Country, who worked with Bauskar, said that situations in which homes get multiple offers were rare in the second half of last year, but they have now returned more frequently as the market got especially busy in the second half of January.

“There’s a lot of movement in the market right now,” Nehate said. “Those $400,000 to $500,000 houses, if they’re priced well based on the subdivision of the city that they are in, they’ll probably get multiple offers.”

Braving the storm

Some buyers in January were so motivated that they were willing to drive in intense winter weather to look at a house.

Arthur Greenstein of Douglas Elliman Real Estate braved the icy roads with his client Boris Safir and his family, hoping to snag a good deal in Prosper. But they weren’t the only buyers who had the same idea.

Even with the weather, the home had 22 showings by the time Greenstein and Safir went through, after just a few days on the market.

“It was the colder day, the second day of ice, we went out and we drove,” Greenstein said. “And literally, by the time we were leaving, there was another couple already there.”

Safir, a 71-year-old real estate investor who runs two optical stores, went under contract on the home the week of Feb. 6 for somewhere between $1 million and $1.5 million in cash after selling his home in Preston Hollow.

Safir started looking in December but found the homes he was interested in were moving very quickly.

“You make an appointment and next thing you know, it’s under contract,” he said.

Greenstein said that across all price ranges, from $500,000 to $5 million, and all parts of D-FW, there is still a lack of quality properties available despite an overall increase in supply. The home Safir put under contract will still need some work before it’s ready for them to move in.

“New product or homes that are really well done come off of the market right away,” Greenstein said. “There are still bargains to be found on things that need to be fixed up.”

Signs of a busy spring

Realtors expect even more buying activity in the coming spring months, which are traditionally a busy time of the year in the housing market. A further fall of mortgage rates could also motivate buyers. The Mortgage Bankers Association forecasted in January that mortgage rates would fall to 5.2% by the end of this year.

Jasmine Francis, a real estate agent with Compass who focuses on neighborhoods in East Dallas, said that buyer activity was scarce before the new year began, but in January, she hosted an open house in Plano that had 12 groups come through, even after the home sat on the market for about two months.

And the next week, she held an open house in Junius Heights near downtown Dallas that wasn’t quite as active as the one in Plano but had about five groups walk through — more than she would have expected late last year.

Francis said people are excited about mortgage rates moving down, even though they aren’t expected to descend quite back to the 3% rates from a year ago. She expects that will fuel the market going into the spring.

“I think that’s encouraging buyers to get and start looking again,” Francis said. “Sellers are now seeing this energy, so they’re willing to put their home on the market.”

Original Article