North Texas Real Estate Information Systems found median home sales prices shot up 26% from last May
Nearly 75,000 people moved to North Texas in 2020, at a time when supply chain issues and the soaring cost of lumber slowed the construction of new homes.
“A lot of people, when they think of buying a house, they think of what they see on TV: that we’re going to pick out a bunch, whichever one we like the best, that’s the one that we’re going to jump on and hopefully win,” McKinney-based realtor Jared Tye said.
Instead, buyers are finding a fast-moving housing market where mid-priced homes go under contract within days, or even hours, of hitting the market.
“It’s really wild,” Tye said.
Inventory Down, Prices Up
North Texas Real Estate Information Systems found median home sales prices shot up 26% from last May to $332,573. May 2021 prices are up 23% since May 2019.
Jim Gaines, an economist with the Real Estate Research Center at Texas A&M University said several factors impact prices in North Texas, including population growth, pent-up demand from the pandemic and future demand from buyers who are fast-tracking plans to buy a home now.
“In addition to the people moving into the area, people who already live here, who might have been considering buying maybe next year or the year after that or the year after that, they’re pulling that forward,” Gaines said. “We’re seeing some pull forward of future demand while interest rates are low and before prices increase any more than they’re already increasing.”
Low housing inventory is also a major factor.
“Being with A&M, I can tell you in Aggie-speak, you ain’t got none,” Gaines said.
The North Texas Real Estate Information Systems estimates North Texas has about a month’s supply of homes for sale.
Taylor Walcik with MetroTex Association of Realtors explained a healthy inventory is considered to be six months.
“People ask me all the time, ‘Is this a bubble? How long is this going to last?'” Walcik said. “My answer is, ‘It’s not a bubble, it’s a simple case of supply and demand.'”
North Texas Agents Share Strategies
With many homes seeing multiple offers, agents said they’re telling buyers to start looking under their budget.
“Something that we’ve been telling our buyers is to take a step back. If you want to end up at $400,000, let’s maybe start looking 10% below that so we can account for the bidding war,” Walcik said.
Walcik said buyers were also doing what they can to sweeten the deal for sellers, including offering to cover the seller’s closing costs or shortening the option period.
In one recent deal, Tye said the buyers promised, in writing, to take the home mostly as-is.
“We are doing an inspection just to look for major issues,” Tye said. “We said, ‘If we don’t find any deficiencies greater than $5,000, we won’t ask for any repairs or concessions at all.'”
Tye said he wouldn’t recommend buyers or sellers skip an inspection completely.
Agents said buyers must have a bank pre-approval letter, showing they are approved for that price.
Some buyers add an escalation clause that automatically matches other offers that come in later.
Realtor Sally Arevalo said the bottom line for buyers is to show the seller your deal can close.
“Just try to come in as clean and strong as possible, close quickly,” Arevalo said.
If a seller is also looking for a home, she tells buyers to consider offering some flexibility.
“If they want a lease-back, offer to do a lease-back if you’re able to let the seller have even up to a month or two months to stay in the home while they look for a place,” Arevalo said.
Cash offers are also in play more often, agents said.
“There’s a lot of investors buying homes for cash. So how do you compete with that? I would say a big part of that is just finding out as much information as possible on the front end,” Tye said.
An all-cash offer may not be the highest offer or the best deal for the buyer, and all-cash bids aren’t necessarily the norm for every home that hits the market.
“There are cases where all of the offers are financed,” Tye said. “It’s not a deal where every single one there’s this crazy, high cash offer, but they are certainly more common than they have been in the past.”
Do ‘Love Letters’ Help or Hurt?
Some buyers are adding a personal touch by writing what’s known as a “love letter” with their offer. It’s a personal note from the buyer to the seller.
Arevalo said if a buyer wants to write a letter, she tells them to focus on why they love the home.
“Talk about the house, what you love about the house, if there are any commonalities as you walk through the house,” Arevalo said. “Compliment them on what they’ve done with the home.”
“No pictures. You have to be careful in how it’s done,” she added.
The National Association of Realtors published guidance warning that love letters can be a liability. Information in a personal note could hint at a buyer’s race, religion or family status – potentially bringing bias into a seller’s decision.
Arevalo said she’s seen mixed results from love letters.
“I’ve had sellers who want to look at them and others who don’t care and say, ‘I don’t want to be influenced by that. It’s just numbers,’” she said.
‘You Have to Make Decisions on the Fly‘
When the Huyser family began to search for a home at the start of the year, they knew the market was pretty hot in North Texas.
“I didn’t expect them to fly off the market so quickly. You hear about it, but it’s another thing to witness it,” Chori Huyser said.
“There was one house we went to see and they were in contract within 24 hours,” Nathan Huyser said.
The family was looking in the Collin and Denton County area – eventually closing on a home in late March after three months of searching.
They said they’re happy with the home they bought and believe their offer beat out the others for a few reasons.
“We did offer between 5-10 [thousand dollars] over [the asking price] and then we got creative with that appraisal,” Chori Huyser said.
Their realtor, Tye, explained the Huysers included a clause in their offer that promised to dip into their savings if the bank appraisal came in a certain amount lower than the sale price – assuring the seller their buyers were serious about closing the deal.
“They can see that we’re confident, that we’ve done our research, that we’re not just trying to throw an offer out there to win an initial contract. We’re actually going to get it to closing for them,” Tye said.
The Huysers also said they wrote a love letter. The sellers wrote one back and left it for the Huyser family to find in the home after they received their keys.
“That was really, really sweet and cool,” Chori Huyser said. “They had referred to things that I had written in the letter.”
“They took the time to read the letter and it did make a difference. I truly believe that,” Nathan Huyser said.
Their advice to other buyers?
Find a real estate agent you trust, be patient and don’t fall in love with every home you see.
“It’s OK if it doesn’t happen now and know that going in. I feel like there’s an emotional attachment, there’s a lot to get frustrated over. It’s up, it’s down, it’s unpredictable,” Chori Huyser said.
“This market it so fast-paced, you have to make decisions on the fly,” Nathan Huyser said.
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By Diana Zoga • •