Spring is here, and with it comes the buzz of activity in the real estate market. But with the backdrop of high mortgage rates and uncertainties around home prices, many in Frisco, Texas, are wondering what this season holds for buyers and sellers alike.

In this March 2024 update, we delve into the latest data, expert predictions, and examine how Frisco compares to national trends. Whether you're looking to buy or sell, stay tuned for an insightful journey into the current state of the Frisco real estate market.

Watch the following video, or continue reading below, to learn more:

Mortgage Rates: The Driving Force

A key player in the real estate arena is mortgage rates, which significantly impact both buying and selling activities. After years of enjoying lower rates, the reality has set in—the era of 3% mortgage rates is behind us. Currently, the magic number seems to hover around 7%. Rates above this figure see a dip in buyer activity, while anything below sparks an uptick in mortgage applications.

While many believe mortgage rates are directly tied to the actions of the Fed, mortgage rates dance closely with inflation, which the Fed influences through interest rates. Last year, as inflation decreased, so did mortgage rates, fueling speculation about the Federal Reserve's potential rate cuts in 2024. However, a recent halt in inflation's decline and robust economic indicators, especially in the job market, have led to an uptick in mortgage rates once again.

The Fed is currently walking a tightrope; it cut rates too soon, and inflation could jump again, as it did in the early 1970s.

If the Fed waits too long to cut rates, they could trigger a recession, as Mark Zandi, Chief Economist at Moody’s Analytics, points out:

Impact on Buyers and Sellers

For buyers, the higher mortgage rates directly affect affordability. But sellers are not immune to these changes either. The high rates have ushered in the 'lock-in effect,' where homeowners with low-rate mortgages hesitate to move, fearing higher rates, as Selma Hepp, Chief Economist at CoreLogic, points out:

I believe the impact of the lock-in effect will start to wane the longer we stay in a higher mortgage rate environment. Buyers and sellers will become more accustomed to the “new normal,” and life continues to happen. The growing family that needs more space is going to find a way to make a move.

That being said, mortgage rates are widely expected to fall this year. Here is the latest 2024 mortgage rate forecast from Fannie Mae:

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Frisco's Real Estate Trends Compared to National Forecasts

Despite initial fears of a housing market crash in 2023 due to rising mortgage rates (home prices actually experienced a brief correction in the second half of 2022), home prices were up for the year approximately 5.5% nationally:

While home prices here in Frisco were relatively flat in 2023 overall, as of February 2024, we are up 3.6% year-over-year:

Looking Ahead: Price Predictions for 2024

Forecasters are optimistic about the real estate market, predicting steady appreciation in home prices in 2024 and beyond. Major financial analysts agree, projecting an average appreciation rate of around 3.2% for the year. This healthy, stable growth reflects a balanced market poised for sustainable expansion.

As activity in Frisco starts to pick-up, here are the current pricing trends of new listings coming on the market:

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Ultimately, home prices are determined by the relationship between supply and demand. There are simply not enough homes for sale to cause any meaningful price declines. As a result, home prices are expected to continue to appreciate through 2028:

Supply, Demand, and the Foreclosure Myth

As mentioned above, supply and demand remain pivotal in shaping the real estate market. In Frisco, while inventory has seen a slight uptick, it's far from the levels that would cause a significant shift in market dynamics and still far below pre-pandemic levels:

Since the onset of the pandemic, there has been talk of a surge in foreclosures that would resemble, if not outpace, what we saw in 2007 and 2008, but that simply hasn’t happened. Here is a look at the latest foreclosure numbers and how they compare to previous years:

This isn’t likely to change in the years ahead either, as homeowners are currently sitting on a staggering amount of equity. 38.7% of all homes are owned free and clear, while an additional 28.7% have more than 50% equity:

Any homeowner who finds themselves in trouble is unlikely to walk away from their equity. They would simply sell their home traditionally, pay off their debts, and move on.

Frisco's Market: A Snapshot of Activity

Despite a somewhat delayed spring buzz, the Frisco real estate market is teeming with activity. From bustling new construction sales offices to an increasing number of listings, it's clear that people are moving forward with their real estate plans. The current trends suggest a strong market with opportunities for both buyers and sellers.

Conclusion: Navigating Frisco's Real Estate Landscape

As we navigate through 2024, the Frisco real estate market presents a landscape of opportunity tempered by caution due to mortgage rates. Whether you're looking to buy a new home or sell your current one, understanding the market's dynamics is key to making informed decisions. For personalized advice and insights into Frisco's real estate market, reach out for a consultation. Together, we can explore your options and find the best path forward for you and your family. Schedule Your Call Today!

Remember, the Frisco real estate market is evolving, but with the right approach, you can navigate these changes successfully. Stay tuned for more updates, and feel free to contact me for any real estate needs or questions.