Denton sees a home sales rebound and rents cool slightly, but affordable housing is still elusive

Buyers are still looking to cash flow local real estate and play the financialization game. This is a big reason why home prices have refused to fall despite the recent jump in inventory.

Investors still bidding up homes

The continued demand for real estate in an over-stimulated economy has prompted other investors to unload their aging properties into this inflated market. A Los Angeles-based investor has been trying to unload a pile of deferred maintenance in Denton for the better part of a year. The inspection report for the property reads like a laundry list of things that should have been taken care of but weren’t.

One local agent/investor is trying to unload their spring cash grab with the hopes of a potential flip and profit. So far, the market isn’t having it. The market for overpriced 60-year-old tear downs has its limits. Some newer entrants to the world of real estate and market cycles are finding this out the hard way.

Scrolling through the tax rolls for local listings in affordable price bands shows a who’s who list of out-of-town speculators, investors and housing financialization. Many of the current listings are an entertaining mix of “opportunity” masking decades of deferred maintenance. If you’re a buyer interested in tackling one of these project properties, be sure you get a thorough inspection.

Share of first-time homebuyers hits a new low

The latest profile of homebuyers and sellers from the National Association of Realtors contains some sobering statistics. The market share of first-time home buyers stood at 50% in 2010. It has fallen to only 24% in 2024. The median age of a first-time homebuyer rose to 38, up from 33 before the pandemic. The median age of all homebuyers in 2024 jumped to 56, up from 47 just a few years ago.

Some other highlights from the report:

• 73% of recent buyers did not have a child under the age of 18 in their home. This is the highest share recorded.
• 26% of homebuyers paid cash for their home, an all-time high for all-cash buyers.
• The typical age of home seller was 63 this year, the highest ever recorded.

Inflation refuses to go away

Core inflation edged up to 3.3% in October. Headline CPI bumped up to 2.6%. It has not gone unnoticed by markets that the Fed is cutting interest rates into an overstimulated economy. Liquidity is still plentiful. Investors are still buying affordable homes where they can find them. Consumers are still spending, and imaginary internet money recently hit a new high. There is still a ton of liquidity chasing a finite amount of assets. This has helped to keep local home prices from falling despite the recent rise in inventory levels.

The purchasing power of the U.S. dollar continues to get crushed. Currency devaluation is a big reason why home prices look so expensive. The Federal Reserve and the U.S. government are still inflating away that huge (and growing) pile of debt. U.S. consumers and working Americans are the collateral damage in this inflationary setup.

Slight relief for renters

The median two-bedroom apartment in Denton cooled to $1,373 per month, according to Apartment List. That’s down 1.4% for the month and 2.7% from last year.

The average price of a single-family rental in Denton County dropped 0.6% from last year. Rental prices have continued to level off with more inventory coming to the market.

Single-family rents in Denton fell 1.7% from last year. Median rents peaked out during the summer at nearly $2,300, but they have fallen to $2,113 as of October. Despite the recent softness, median rents are still roughly $300 higher than where they stood before the pandemic.

Fannie and Freddie inject more risk into the mortgage pool

When the going gets tough, never underestimate the creativity of big finance. With stagnating home sales and mortgage originations, the real estate industry is looking for ways to juice transaction activity. Fannie Mae and Freddie Mac are ready to provide some “help.” That help comes in the form of expanded appraisal waivers beginning in the first quarter of 2025.

The announcement is being advertised as a way to save homebuyers the dreaded expense of a real property appraisal. Determining the actual value of a home under prudent risk mitigation is becoming secondary to the need for transaction growth. By raising the LTVs (Loan to Value) for appraisal waivers to 90% or even higher, Fannie and Freddie are exposing U.S. taxpayers to more potential expense and risk.

I’m old enough to remember when a real estate brokerage and consumer portal thought it would be a great idea to flip homes using their robust “data and technology-driven approaches.” That is, until they lost a billion dollars in the process.

It’s all fun and games when you are playing with other people’s money.