Williamson County Homes Under Contract: Buyers Are Still Buying

Welcome to the Williamson County Real Estate Report. I am John Turner, team leader of the Turner Victory Team at Onward Real Estate, and we bring you this report every week. This week I am not going to start with the three big ideas we normally have. I just want to talk about the market and what is going on.

Let’s switch over to our charts. The Turner Victory Team Market Health Score is at 40 this week. That still falls in the balanced range, but it is really leaning toward buyers. We have 1,686 homes on the market right now and 3.63 months of supply. If you see numbers from Realtracs, which is the MLS, their months of supply is actually higher than ours.

We calculate it a little differently. We use the same calculation every week so we can watch the trend, and so do they. One is not right or wrong. It is just different. The 30 year mortgage rate is 7.28% this week, definitely up from where we were in February.

Now let’s look at what is going on with the market. The light shaded blue is new construction. There were 160 listings that came on the market this week. The good news, and sometimes this gets lost, is that 105 homes went under contract this week, and only about 25% of those were new construction. So about 75% of those 105 were resale homes.

Sometimes when the market is not moving as quickly as we would like, it sounds like it is all doom and gloom, and it is not. There are still quite a few homes selling every week in our county. 118 closed this week. We will do our September recap next week. I like to give the data a little time to come in so we have everything we need.

The interesting thing is 187 listings expired or were canceled. Some of those are new construction where they will put them right back on, and that would account for some of the 160 new listings we saw this week. Sometimes it is just people getting frustrated, or pulling off the market and adjusting their strategy.

What is really interesting in Williamson County is that when we look at months of supply all the way up to the $2 million price point, we are still in the green. That means things are still moving at a fairly decent pace. It does not mean every house is selling. Some homes sit for quite a while and may not sell, and some go off the market fairly quickly.

But from a market health standpoint, the market is very healthy. It does not mean there is no frustration. It does mean that even though inventory has built up, we are not seeing anything we would consider a dangerous level. I do think we have downward pressure on some prices. In certain segments and certain areas prices are still going up, but overall I think there is downward pressure.

Active inventory is the highest we have seen in some time. We did get a pretty decent drop recently. Some of that may be new construction inventory expiring, and some of it is seasonality, because this is usually when inventory starts to pull back for the fall.

Months of supply is not near where it was at the height. We were above four months of supply earlier this year, so we have seen that drop. Again, that goes back to a healthy market.

New listings, the homes coming on the market, have trailed way behind the past couple of years for many weeks now. We had 160 listings come on the market this week. Last year we had 207 for the same week, and the year before 241. That is one of the things keeping inventory from building up even more. If new listings were hitting the market like they did the past couple of years, our inventory would be much higher, and we would really be seeing downward pressure on prices.

The other thing keeping inventory in check is our pendings. This week the 105 pendings exceeded anything we have seen for the same week over the past four years. That is encouraging. Even though inventory is higher than past years, our pendings are slightly higher too, at least for the past few weeks.

This chart is days on market. We have the MLS days on market versus what we call Tru Days on Market. The MLS number is what you see on the listing, but sometimes listings come off and go back on, and the days on market reset. There is a little bit of a difference in most ranges, but once we get to $1.5 million and above, the MLS shows 36 days and we have it at 54.

Around $3.5 million, it is 56 days versus 102. Naturally, the higher the price range, the longer you will be on the market. But just keep in mind that the MLS number alone may not give you the true picture. It is not wrong. It is just the way it is designed.

Showings per listing dropped again, down to 0.81 showings per listing per week across the board. When we compare this week to four weeks ago, some of our lower price ranges picked up a few more showings. We saw that in the $1 million to $1.5 million range and the $2 million to $3 million range as well. But for the most part, showings are down, and the $600,000s are way down.

That is a price point that is probably more affected by mortgage rates. At the lowest price points, buyers can often compare the payment to renting. At the higher price points, buyers are often cash heavy. But in the middle, from the $600,000s up to about a million, buyers are more affected by mortgage rates than anybody else. The $600,000s dropped almost one showing per listing per week. The $700,000s, the $1.5 million to $2 million range, and above $3 million lost some momentum too.

Let’s look at mortgage rates real quick. This chart goes back to 1971. In 1981, rates were 18.53%. When I started in real estate in August 2000, they were 7.96%. So rates when I started were actually higher than they are now. The very bottom of the chart is 2020, 2021, and 2022. I show this to put 7.28% into perspective.

I am not one of those who says rates were much harder in my day. That is not a fair comparison, because of wages and house prices back then. But those 3% rates were an anomaly. Going all the way back to 1971, we never saw rates that low. So I do not think we will see them again, at least not anytime soon.

For everybody waiting for a 3% or 4% mortgage rate, I do not see it happening. And if you are a seller thinking rates will come back down and then people will pay a certain price for your house, I think you are mistaken. We did see good activity when rates hit 5.98% earlier this year, and in the low sixes. Even then, affordability was tough because of home prices versus wages.

I can see a scenario where we get back down to that, but I do not see it anytime soon. A lot can change. But the things that usually cause mortgage rates to drop have not been causing them to drop lately. There is a lot going on in the bond market and around the world that affects rates. So I am not seeing rates come down quickly, and I am not seeing them come down to 3% or 4%.

So if you are thinking about selling in this market, you have to figure out how to make your house affordable for a buyer. Most of that is getting the price right. Some of it is offering to pay closing costs or buy down the mortgage rate. There are several things you can do to make your home more affordable for a buyer, and you need to, because you have seen how much inventory is out there.

Builders are giving a lot of incentives. They really do not want to reduce their prices. It hurts their comps and everyone else in the neighborhood. But they do like giving incentives. I was in one community this weekend with some potential buyers, and the builder was offering $45,000 in flex cash. Use it to buy down your rate, pay closing costs, or use it for upgrades.

We are not reducing the price, but here is $45,000. We are seeing a lot of that right now, so there are opportunities there. Also, if a home has been on the market for a while, there is a good chance the seller is negotiable, if they truly want to sell in this market.

That is all I have for you today. Next week we will bring the September recap and see how Williamson County did in September. Please feel free to reach out if you have any questions. I am John Turner, team leader of the Turner Victory Team at Onward Real Estate. I appreciate you tuning in, and until next week, I hope you make it a great week.