Have you ever wondered how Federal Reserve’s decisions affect your local real estate market? Kelly Raulston, chair of the Greater Tyler Association of Realtors, shares the effects of the Fed’s recent rate hike, a move that could potentially drive up the cost of mortgages. Raulston explains local real estate market dynamics, shares key statistics from the Smith County Housing Report, and gives practical advice for both buyers and sellers navigating this changing landscape.
Raulston also explores the phenomenon of underpricing homes to encourage competitive bidding, a strategy with its own set of benefits and drawbacks. She shares her observations on the prevalence of multiple offer situations in Tyler, and the variables that can contribute to them; as well as the influx of cash buyers from larger cities, and how local sellers can weigh the advantages of cash offers versus financed ones. Don’t miss this opportunity to gain a broader understanding of the real estate climate in Tyler, Texas.
MIKE LANDESS: For UT Tyler Radio. I’m Mike Landess. The Federal Reserve recently raised its key rate for the 11th time to the highest level in 22 years. It’s a move that will likely lead to further increases in the cost of mortgages. With us to discuss how this affects the real estate market in our area is Kelly Ralston, chairman of the Greater Tyler Association of Realtors. So where does this latest news leave local buyers, sellers, and real estate folks?
KELLY RAULSTON: That’s a great question and so even with the pandemic, when I was showing clients in, the interest rates were 3% or 2.5% for some people you still have to be able to financially make that decision whether or not you can buy a home. So, I’m always going to tell my clients to talk to a local lender or local bank to make the determination if they can financially afford becoming a homeowner. Because although our inventory has increased, and with our interest rates increasing, our inventory is also increased and so there’s more choices out there for buyers. But you also have to keep price point in mind as well. So, we have our recent Smith County Housing Report. That’s based on June data of this year compared to last, and the median price in Smith County is $343,500. So just shy of $344,000 for all of Smith County and so with median you’ve got 50% of your sales were over that and 50% of your sales were under that. So, the lower you price your house, the more people who are able to afford that home. So in terms of buying, it’s very competitive still, especially as the price point decreases. And now for sellers, they’ve, in my opinion, you’ve got to take interest rates into an account when you are pricing your house because they essentially doubled within a year, and so it has definitely affected the buying power within that year. So, yes, you can compare sales that were done within the past six to 12 months, but you still have to be cognizant of the fact that the interest rates have increased. And what is your goal? Is your goal to sell your home quickly? Can you wait a little bit on your sale of your house? So those are some things that’s considered when you are buying or selling in Tyler.
LANDESS: It’s interesting that one of the relatively new to me anyway the low balling of setting the price. I mean I know of one story, one anecdote, about a house that sold in the Azalea district, where they purposely put it, you know, $30, $40,000 under what market was to see how many people would jump in there. And so many people jumped in, it bit up and they got more than they were actually asking. Is that a new thing?
RAULSTON: There are a lot of really highly sought out areas in Tyler Texas, but especially with the medical school coming that area, especially trying to be close to the hospitals, because you’ve got all these doctors that are coming in, all these nurses who are coming in, and so we I recently had a property that was over in that area and we made the decision to price it, to sell. That did result in a multiple offer situation. So, there are multiple offer situations still happening in Tyler Texas and I would love to tell you it’s oh yeah, anything that’s under $350,000, it will get a multiple offer situation. That’s not what I’m saying. What I’m saying is it’s a possibility because there are some luxury properties. Depending upon if it’s lakefront, depending upon if it is in an area that people want to live in, desirability-wise, there could still be a multiple offer situation. It all depends on price point, location and what does the inside of the home look like? Has it been well taken care of? Have there been improvements? So, there are still multiple offer situations coming about. But, as a seller, when you’re pricing your house, keep in mind that the first offer you might get might check all of your boxes and might say you know what? This might be the offer I wanna take. And take the offer if it’s gonna make you and the buyer come to a mutual agreement. Don’t just say, oh well, I’m gonna wait until there are more offers coming Because again, interest rates have increased. We don’t know when the next offer is gonna come about. You know what I mean.
LANDESS: We’re talking about interest rates and of course that implies that someone is gonna have to get a mortgage. Some people someone’s coming from Los Angeles or Chicago or New York. They may have cash to work with because they’ve sold their one-bedroom condo in San Francisco for two million.
RAULSTON: Well, there’s a lot of cash in Smith County as well, too, it’s also very prevalent as well. So that’s also something to consider, and when you’re a seller and you’re getting an offer that’s either cash versus something that’s financed, you’ll have to talk it over with your local real estate agent to make the determination of is that going to be the right offer for you? Because you have to make sure that it’s going to be a mutual offer in order for it to get accepted, with the buyer and the seller in mind.
LANDESS: What’s the biggest challenge right now for real estate folks here in Tyler? As the chairman of the organization, what’s the biggest challenge? You hear from the people you work with.
RAULSTON: I think the biggest challenge that we are going through right now is affordable inventory. We’ve got so many people who do want to purchase a home but although our inventory has increased, it is still very low in comparison to other years. So, based on our June report, we have about three and a half months of inventory. So basically, if no one listed their house in three and a half months, theoretically all of those houses would be sold right. That’s the easiest way I can explain housing inventory. But we have buyers who want to buy so desperately, and they want to become a homeowner but there’s just nothing that is within their price point, based on what their loan requirements are and based on what their commute is. That’s just been a pretty big challenge for our area.
LANDESS: What about the sale of brand-new homes? We just had the big parade of homes not long ago. The sale of new homes as compared to existing homes.
RAULSTON: I would say so we do have a lot of new construction houses out there that are available for purchase and again, they all vary within price per square foot what amenities they offer. So we do have those available. Now the supply chain issues have gotten better because, although the interest rates were low during the pandemic and it was a great time to buy, I can tell you personally when I was trying to buy a refrigerator, a washer, a dryer, remodel a home, it was very challenging because we had to find all of those supplies that were readily accessible, in our price point and in a design that we liked. And so there are some new construction homes out there that are available. A new construction house it’s gonna be more energy efficient so that theoretically can save you some more money on utilities. You just have to make the determination whether or not that’s going to be a good fit for you.
LANDESS: Our guest has been Kelly Rolston, chairman of the Greater Tyler Association of Realtors. To hear this conversation again or to share it, go to KVUT.org. I’m Mike Landess for UT Tyler Radio.
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