More DFW Home Purchase Deals Are Falling Through
The number of Dallas area home sales that are falling out of contract has risen in recent months.
Almost 10 percent of Dallas-area home purchase agreements fell through before the deal could go to final contract in the fourth quarter, according to a new study by Trulia.
The fall-out rate in Dallas was more than twice the national rate of 4.3 percent.
Back in fourth quarter 2014, only about one half of one percent of home purchase agreements failed to move ahead.
The percentage of failed home deals was even greater in Fort Worth — 10.4 percent in the most recent quarter.
Home purchase agreements most often stall when the buyer has trouble getting a mortgage, finds an unexpected condition issue, can't sell their current home or can't get the new property to appraise for lending.
With the run up in housing costs in North Texas and rises in mortgage rates in recent months, some buyers may be having trouble getting their property purchase lined up.
Home sales to first time buyers are the most likely to come unglued.
In 2016, 15 percent of Dallas-area home sales to first-time buyers failed to follow through. That's the third highest fallout rate of any U.S. market, Trulia said.
Fort Worth had an even higher first time buyer fall-out rate — 15.3 percent.
"One indication that first-time homebuyers are at least partially the source of increasing sale fails is the increasing dominance of starter and trade-up home sales that are falling through," Trulia said in the report. "Not only are first-time homebuyers unfamiliar with the process, they face unique hurdles.
"They don't bring equity or a credit history from a previous home, " the report said. "Their finances face additional scrutiny."
With mortgage rates expected to rise to near 5 percent this year, don't be surprised if more first-time homeowners have trouble qualifying for a loan.
And the more than 40 percent jump in median home sales prices in North Texas during the last four years has put appraisals under pressure.