LITTLE ELM, Texas — When Michael Coleman II started looking to purchase his first home late last year, he knew he wanted three bedrooms, two bathrooms, a family-friendly neighborhood and, as a bonus, a spacious backyard.
What he didn't know was how crazy the DFW housing market would be.
“High asking prices, bidding wars... all that stuff," Coleman said. "I just knew that I couldn’t compete.”
So, he decided to wait.
"What I thought would be a two-to-three month wait ended up being almost a year-long wait," Coleman said.
Last week, the day before Thanksgiving, Coleman closed on a house with three bedrooms, two bathrooms and a backyard fit for his future dog in a growing neighborhood in Little Elm.
"I cried as soon as I got my keys," Coleman said.
Not only did Coleman get his house, he got it for more than $40,000 below asking price.
"With the incentives from the builder, I probably saved $55,000 to $65,000 on my newbuild home," Coleman said.
DFW homebuyers who've purchased homes in the past couple of months, like Coleman, have seen this stark contrast from this time last year or even eight months ago.
Home prices in the DFW Metroplex have plummeted, with median prices down six figures in some cities, as buying slows amidst interest rate hikes. With mortgage rates hovering between six and seven percent, buyers are gawking after two-to-three percent rates that set the market on fire.
Cathy DeWitt Dunn, president and CEO of DeWitt & Dunn Financial Services, said this cooler market offers different opportunities for buyers.
"We were paying perhaps 30 to 40 percent more on a house, we're having constant bids," DeWitt Dunn said. "People were writing letters with their family's intent and explaining that they're going to stay there forever and just hoping to get selected."
Now, buyers are able to navigate the market without the pressure to outbid dozens of other buyers, and houses are staying on the market for longer.
Coleman said he had multiple options during this search this fall. He said if he had bought last fall, he's "sure" he would have had to go without a number of things on this house wish list because the goal then was simply to get a home.
Even with a higher mortgage rate, he said he made the perfect decision for him and his budget.
"That tradeoff between the sale price being low and the rates being high, I that that was a fair tradeoff knowing that I can refinance later on when the market settles down," Coleman said.
DeWitt Dunn said that is a good plan for anyone who is able to comfortably manage their payments.
“I don’t care what the interest rate is. I want to really go back as a planner to find out if that’s going to work with you and your family," DeWitt Dunn said. "I do think there may be some buying opportunities here coming up and we’ve been just so bamboozled and drinking the Kool-Aid of the low interest rate environment.”
DeWitt said anyone looking to buy a home should look at their budget and buy based on what they can afford to pay without being scared off by high mortgage rates, especially if lower prices can create what she calls a "seesaw" effect.
"If you’re looking to buy a home, the time is right when it’s right for you and your family and you’ve budgeted accordingly…that is the key," DeWitt Dunn said.