Low mortgage rates have spurred a buying frenzy in the Texas housing market.Home prices in the Lone Star State climbed 18.6% year-over-year in 2021, per Texas A&M University.Zillow predicts that secondary cities – those just outside fast-growing metros – will rule 2022.Get a daily selection of our top stories based on your reading preferences.In 2020, Courtney Zaelit, a first-time homebuyer from Bedford, Texas, found the home of her dreams: a three-bedroom house in North Richland Hills, a Dallas-Fort Worth suburb.
The $215,000 fixer-upper was in need of renovations, but it had great curb appeal and fit her family’s budget.
“We thought we were fortunate to find a house that was reasonably priced,” she told Insider.But another buyer outbid her, paying well over the asking price.
“I felt defeated,” she said.”We knew there were a few offers but we didn’t anticipate the seller holding out for the best offer.I know many are looking at numbers and not need.
Who can blame them? It just gives us first time homebuyers a disadvantage.”
She’s back in the market, but fears disappointment as homes in Texas become more expensive.
Zaelit’s experience shows how competitive the market has become for local Texans.The state has a lot of transplants from California and Florida , where buyers often pay more for housing.Home prices across the state shot up 18.6% year-over-year in 2021, a recent Texas A&M study found.
Zaliet wonders if she’ll ever be able to afford another Texas home.
“I’ve tried not to wear my emotions on my sleeve and go into this with a business mindset but that’s hard to do when you’re making a big financial decision that impacts the future of your family,” she said.
Texas-sized demand — and affordability issues The homebuying frenzy that swept the state the past few years may be finally starting to cool.
Austin, the hottest housing market in 2020 according to Zillow , fell to number ten in 2021.In its place, cities like Tampa, Florida, and Raleigh, North Carolina, topped the list, luring buyers away from the Lone Star State.
Austin’s “frankly ridiculous pace of growth has slowed considerably in recent months and we expect this trend to continue in 2022 as affordability pressures mount,” Zillow Economist Nicole Bachaud told Insider.
In a seller’s market, buyers are choosing to opt out Zaelit says all this homeowner power means they’re unwilling to make major repairs or accept offers that include first-time homebuyer down payment assistance.
It’s causing some potential buyers, like Zaelit, to pause on the market.
“We are currently stuck in an apartment for the time being.”
The real estate platform Redfin discovered that in October 2021, 68.4% of its offers in Dallas faced a bidding war compared to just 53.3% in 2020.
Moni Loa knows all about bidding wars.She recently put her McKinney, Texas, house on the market, received 25 offers, and sold within 48 hours for $90,000 over asking price.
Now Loa is on the hunt for a new home, but thinks buying has become too aggressive in Texas and is considering big moves.
“We downsized and are renting now.We’re going to see if the market levels out,” Loa said.”If not, it might not be a bad idea to start looking outside of Dallas-Fort Worth or even outside of Texas.”
Bachuad, the economist who has been tracking price growth, would agree with this strategy.
She says that while home prices are expected to cool off in 2022, those seeking more affordability may want to look outside of Texas’ popular markets.Zillow predicts that in 2022, “secondary” cities lying just outside major ones will see greater demand, as work-from-home continues to free people of commutes.
“We would consider moving to a less popular area if we could afford it,” Zaelit said.
“It’s so stressful and discouraging knowing that we may not find what we are looking for,” she said.”It would mean the world to be able to call a place ‘home.’ We are not looking for profit, we are looking for a place to make memories.”