If you’re ready to get into the Dallas housing market, it’s important to be armed with as much information as possible. I never recommend jumping into the market without doing proper research ahead of time.
There are three main areas of the housing market to watch and understand: interest rates, building materials, and the possibility of an economic slowdown. Here is what is taking place among these three issues now.
1. Interest Rates
One of the most important things to consider when buying a home is the interest rate you will be charged to borrow the money. So, the question is, are the interest rates here to stay? The latest information from Freddie Mac makes it appear they are. We are currently at a 21-month low in interest rates. According to the Washington Post, the 30-year fixed rate average sank to 3.82 with an average 0.5 point. Only a week ago we were seeing an average rate of 3.99 and 4.54 about a year ago. If you’re considering a 15-year fixed rate, the average is 3.28.
2. Building Materials
Talk of tariffs could also affect the housing market. According to a recent article, the National Association of Home Builders reports that as much as $10 billion in goods imported from China are used in homebuilding. Depending on the outcome of the tariff and trade discussions between several countries, there could be as much as a 25% boost in the cost of building materials. You may recall that in 2018, President Trump imposed a 10% tariff on goods which represented a $1 billion tax increase on residential construction. If the tariff jumps to 25% that is the same as imposing a $2.5 billion tax on housing.
3. Economic Slowdown
We began the year with many economic leaders thinking we could expect a recession in late 2019 or early 2020. As spring approached, it’s reported that economists had started to push that projection past 2020. Now, three leading surveys indicate that it may begin in the next eighteen months. USA Today released an article two days ago reporting that this economy’s mantra has been slow and steady. It didn’t take off like prior rebounds until recently, which means it didn’t develop the kind of excesses that have doomed past recoveries, giving it a longer lifespan.