TEXARKANA — Despite rising mortgage interest rates, housing affordability in Texarkana has leveled out, experts say.
A recent study released by the Texas A&M Real Estate Research Center shows that the Texarkana region ranks highly in overall housing affordability even though mortgage rates are still over 5%.
“It kind of washes out, overall,” said Jared Horton, owner/broker at Century 21 in Texarkana, Texas. “Yes, interest rates have gone up, but house prices have leveled off and maybe come down a little bit.
“The market is shifting right now.”
The Texas Housing Affordability Index measures the relationship between the median family income and the required income to purchase the median.
According to the TRERC, Texarkana ranked eighth out of 45 areas in Texas listed on a THAI graph, with an index of just under 1.75.
A higher THAI indicates relatively greater affordability. A ratio of 1.00 means the median family income is exactly sufficient to purchase the median-priced home. A THAI above 1.00 means the MFI exceeds the required income to purchase a median-priced home.
Conversely, a THAI below 1.00 indicates the MFI is not sufficient to purchase the median-priced home. The THAI provides a tool for planners, practitioners, and other folks in the real estate industry to compare affordability over time and across regions.
Wichita Falls ranked first at around 2.10. Travis County was last at about 0.80.
The overall index for the state of Texas was 1.22.
Horton said a main reason Texarkana houses are more affordable now is that inventory has increased. Century 21 has about 3 1/2 months of supply, Horton said. This same time last year, that number was just under two months.
“It’s just supply and demand, and there’s a lot more supply now,” he said.
Due to the lack of inventory before, sellers were able to jack up prices and still sell their homes rather quickly. But now, the buyers possess more power in negotiations.
“We can’t let sellers price the houses anymore because we’re not in multiple-offer situations anymore where people are offering $5,000 more than someone’s highest offer,” he said. “There’s negotiations going on. It’s starting to level out, is what I’m seeing.”
While higher mortgage rates are causing higher monthly payments, buyers’ current ability to negotiate for lower prices is somewhat offsetting the rate increases, Horton said.
“Let’s say a seller has a home priced at $250,000. You’re now not going to end up having to pay $255,000 or $260,000 for that house. You’ll probably be able to get it for more like $245,000.”
Horton said he’s had to explain to sellers of homes lately that they may have to adjust their prices and be a bit more flexible.
“The new reality is different than it was six months ago, and we’ve had to sit down and have some real talks about what (sellers’) expectations are.”
Century 21’s median sales price is at $246,500 right now, which is up 2.7% from last year. That is actually a below-average level of annual appreciation, Horton said.
“Before the big spike, we appreciated somewhere around the 3% - 3.5% rate. The houses aren’t appreciating at their normal rate. So, it’s going to force us to have a flat market and lower appreciation for a while, until we equalize back out.”
According to Realtor.com, the median listing home price in Texarkana was $245,000 as of July 2022, trending up 11.5% year-over-year. The median listing home price per square foot was $121.