Single-family home sales in core Dallas-Fort Worth counties were down 27% compared to a year earlier. Similarly, the number of listings at the start of May was off a third from the same time last year.
The big question on everyone’s mind is “how much has the market changed?” Agents are asking, “what should I be doing to respond to changing market conditions?”
While the COVID-19 outbreak has dampened both the supply and demand side of the market, Dallas started off in a position of very low inventory that has persisted through the crisis.
Inventory is usually measured as the number of months it would take to sell all of the current listings on the market. Inventory in the low-end of the market has been limited for a few years as buyers quickly snap up any low-priced homes that become available. These buyers tend to be growing families attracted to employment opportunities in the Dallas-Fort Worth area.
A tight market continues
Active listings of low-priced homes under $300,000 fell from 8,000 at the start of February to only 5,300 by the start of May, resulting in a fall in inventory from 2.1 months to only 1.5.
A figure around 5 or 6 months of inventory is considered “balanced”, while less than 3 months is considered quite tight. In tight conditions, sellers usually have the upper hand, and homes on the market sell quickly.
This means that despite the COVID outbreak, it remains hard to find starter homes, and hard for agents to find enough listings to sell to keep up with demand. Viewed by school attendance zone, it looks like this:
High-scoring elementary school attendance zones tend to have lower inventory across all prices ranges, as these areas are in demand by families.
Where were changes evident?
Approximately three quarters of the elementary school attendance zones across the metro area recorded a drop in months of inventory.
We also noticed that in the last 90 days (Feb 2 to May 2, 2020), the lesser-performing school zones had a bigger drop in inventory. We believe this is due to more sellers holding back supply in these areas to wait for the COVID to clear before listing. As mobility is reduced, purchase and sales decisions have been temporarily put on hold.
Meanwhile, sellers in high-performing school zones have more confidence to list regardless of market conditions.
Agents: preparing for opportunity with targeted marketing
We believe this is a great time for listing agents to start looking at creative ways to acquire more listings ahead of a rebound in demand.
With inventory of affordable homes so low, this is increasingly going to mean agents should look outside of their comfort zone. That means areas a little further away.
If fewer people are listing their homes for sale, a bit of targeted marketing to current homeowners makes sense by reaching out to owners in high-demand, affordable areas where inventory is low.
In these areas, young families with school-age children will, soon enough, to be back-to-business and looking for homes.
The downsizers: young families want to buy houses from them
The kids are grown, the houses are too big for two people, and the expense of property tax and maintenance of a large house in a “prime” school district no longer makes sense. The mortgage may be paid off or nearly paid off.
These houses were bought a long time ago and are in excellent, in-demand elementary school attendance zones. Also, the houses aren’t old enough to need extensive renovation that a young family has no time to manage. Also, they tend to be priced low enough that a young, growing family might afford them. Where are these located?
We calculated there are 2,893 of these in the Metroplex right now. If you are an agent, I’d be sending postcards to these guys right away.
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Special thanks to Norm Miller of University of San Diego, and Shaofei Chen for their contributions to this article.