New Home Prices Dropping – Should We Worry?
For the last several months there have been reports of new home prices dropping on a national level. Back on Oct. 24, 2019 CNBC published an article indicating median new home prices had dropped 8.8% from a year prior (link: https://www.cnbc.com/2019/10/24/september-new-home-price-drops-to-lowest-in-nearly-3-years.html).
Just recently in the North Texas market I’ve encountered many new home developers dropping prices, most significantly in the $350,000 or higher price range. One developer in Tarrant County told me that they have inventory of homes priced in the high $600,000 price range which will likely see price drops of $75,000 or more. If builders cannot sell their new homes, imagine the impact on a resale in that same market area.
Now, if the new home market is struggling, what does that do to existing homes in the re-sale markets, especially if in a market area where existing homes have to compete with new home construction?
As a certified real estate appraiser on the ground seeing properties every day, the increasing reliance on concessions (those extra discounts or perks in a purchase contract, like cash back at close of escrow), and longer marketing times is showing a trend that the market is slowing or stalled. Lower interest rates can only spark home buying so much. Affordable market areas of a few years ago are now topped out in terms of price (with higher property taxes as well).
Should we worry?
If you are in a market area of $350,000 or over, you may want to look at what’s going on at your local level. And, it may be a great idea to hire an appraiser so that at least you can gauge your property value and marketing trends better. Lastly, in the North Texas market area, this is also a good time to find out what your home’s value is for property tax appeal purposes