Finding the perfect home in your price range is difficult, but do you ever wonder if your fellow house hunters are suffering the same real estate woes?
Trulia’s newest report, MarketMatch, parallels popular home-price searches with the available inventory in any given locale. Nationally, 10.4 percent of home searches failed to yield available homes on the market at the same price point. Over the same six-month period last year, the market mismatch rate was lower, at 8.3 percent.
Currently, many metros suffer tight inventory within the entry-level price range. This creates competition among local buyers and tends to subsequently drive up home prices on the lower end of for-sale supply. In Texas specifically, a high percentage of prospective homebuyers are searching for less expensive homes than current inventory allows. Out of the six Texas metros analyzed, Trulia found five in the bottom quarter of market match scores this year, and three that were ranked within the top 10 value-focused markets: Houston, Dallas, and Fort Worth.
Houston and Dallas hold the second highest market mismatch rates in the nation, at 31.2 and 30.3 percent, respectively. Nationally, 53.4 percent of search properties were valued below the median list price. Meanwhile, three-quarters of home searches in Dallas and Houston fell below the median point.
Houston’s mismatch, currently at 31.2 percent, has improved slightly since last year, when 32.1 percent of homes searches were incompatible with the available inventory. The median list price for homes in Houston during the six-month period ending in mid-September was $334,950 — and over three-quarters of buyers in the metro were seeking less expensive properties.
Last year in Dallas, 73.1 percent of home searches fell below median list price, creating a market mismatch of 29.4 percent. This year, 74.3 percent of home searches were below the midway price point, boosting the market mismatch to 30.3 percent.
Trulia found a similar trend in disproportion between searches and for-sale homes in Fort Worth, where 73.2 percent of visits were under the median price point. The percentage of homebuyers unable to find inventory within their price range increased 1.7 percent year-over-year, reaching 20.7 percent from a prior 18.9 percent.
Much of the mismatch is driven by local market dynamics, including employment and income growth. The Lone Star State is an oil industry hub, and declining gas prices (down 50 percent) have severely slowed job growth in many Texas markets. Houston job growth was at 3.6 percent in early 2015 and sits at 0.6 percent today, which could create more caution among homebuyers to search above their comfortable price range. Houston’s job growth is far below the current national average, which is 1.9 percent.
On the other hand, Dallas’ job growth is up year-over-year. But price per square foot in Dallas grew 10.4 percent while median list price jumped 11.8 percent year-over-year in August. With interest rates flat, real estate market growth pushed homes out of many prospective buyers’ budgets.
This information is pertinent for entry-level buyers across Texas. Given the data, patience is key when searching for a home in Houston, Dallas, or Fort Worth. With more time, you may even be able to increase your budget and benefit from more supply and less demand.