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As we move beyond the frenzied real estate market brought on by the pandemic, we assess the new normal for residential real estate in the Fort Worth market. We all knew that year-over-year double-digit home value appreciation would not be sustainable, but what does appreciation look like in the years ahead? More importantly, does homeownership remain a key component in attaining the American dream?
I was lucky to begin my mortgage career in the Fort Worth market nearly four decades ago. I have seen our market go through perilous and challenging times, but I could not feel more positive about the prospects for Fort Worth’s real estate market. You should be excited, too.
A low-rate environment and limited housing inventory fueled rapid appreciation over the past two years. Long-term rates have quickly increased in 2022, and we now see the rate of appreciation has slowed. These are necessary corrections in a very heated housing market. I expect to see appreciation rates fall to their historic norms and return to single-digit levels in the years ahead. Home appreciation levels in the 4%-5% range are normal in a healthy market.
Rapid appreciation and a higher-rate environment have caused affordability challenges for our first-time buyers. Millennials make up more than half of all home purchasers today, and they will continue to be a very important demographic in household formations. We will continue to see strong demand from this segment. Many available loan programs assist these buyers with minimum-down payment loans. Don’t believe the myth that a 20% down payment is required to secure your dream home.
Underserved markets are one of the bigger challenges we face as an industry. Serving diverse communities is essential for communities to thrive and is positive for society. The mortgage industry is making progress in serving underserved communities. Education and financial literacy are a great first step. The homebuying journey can seem complicated and a far-fetched dream. The opportunity of homeownership is possible with a good plan in place. I highly recommend taking that first step by meeting with a mortgage professional to educate you and act as a resource.
I learned long ago that homeownership gives someone a stake in society. A home provides shelter for families, is a place for lasting memories, and has proven over time to be a significant wealth builder. Recent Federal Reserve data indicates the average homeowner’s net worth is 40 times greater than that of a renter.
Homeownership continues to be an important component of the American dream. Working with a local real estate professional and mortgage lender is a critical first step in your homebuying journey. Having a trusted professional holding your hand through the process is a must. There are many resources available online to help get you started. Once you are ready to move forward, my best advice is to find local professionals to help make your homebuying dreams come true.
Troy Fore Jr. is president of First Financial Mortgage and is based in Fort Worth.