With home prices continuing to rise along with interest rates, changes are taking place in the Lewisville, Flower Mound and Highland Village housing markets.

Although more homes are now coming on the market than in previous years, homebuyers—particularly first-time buyers—still face challenges.

“[The market] just recently changed,” said Jason Haugen, a Highland Village-based Realtor and Haugen Properties owner. “It’s not a buyer’s market, it’s still a seller’s market. But it’s not as good of a seller’s market as it was, and it is better for buyers.”

Home prices in Lewisville, Flower Mound and Highland Village have seen a steady increase in median home prices since 2018 with a steep increase in 2020-21, according to data from the Collin County Association of Realtors.

The market continues to change this year with more homes available and a significant interest rate hike.

More homes are also coming on the market than in the past few years. Lewisville, Flower Mound and Highland Village saw drops in active listings in 2021 when interest rates were low. However, since then, Lewisville saw a 24.7% increase, Flower Mound saw a 22.2% increase and Highland Village saw a 60% increase in the number of homes listed for sale from last year, according to data from the Greater Lewisville Association of REALTORS.

Inventory is going up, and homebuyers are not wanting to pay hefty prices with the increase in interest rates compared to last year, Haugen said.

Interest rates

In the past six months, interest rates have nearly doubled. In January, 30-year mortgage interest rates were at 3.22%, which was up slightly from the lower rates of 2021 at 2.65%. Those rates are now up to 5.27%, as of July 5, according to Freddie Mac, the Federal Home Loan Mortgage Corporation.

“It’s a big deal for anybody,” said Lisa-Marie Thompson, a Flower Mound-based loan officer. “I’ve been in the business for 32 years. I’ve never seen a full 1% change in a year. So 2% in six months is a little overwhelming.”

The change in interest rate does not just affect buying a home, but it increases the buyer’s house payment with just the interest rate increases, Thompson said.

Haugen said he is not sure how long it will take for people to adjust to the higher interest rates, especially younger homebuyers. The interest rate increase of 2%-3% is rarely seen, he said.

With the interest rate increase happening in a short period of time, people are left scrambling to adjust their loan preapprovals. For example, Thompson saw people who were preapproved in January and were no longer preapproved for the same amount six months later, she said.

Rising prices

The market changed for both buyers and sellers in the past year. Denton County home prices have gone up 26% in the last year, Thompson said.

For buyers, this means it is not just rising home prices that cause challenges for first-time homebuyers, said Brandy Jett, president-elect of the Greater Lewisville Association of REALTORS. Companies are using cash to buy homes in the area.

“[Companies buying up homes are] squeezing out first-time homebuyers,” Jett said. “And then with the interest rates going up, these companies can pay cash, so affordable housing is less and less [available]. Now it’s becoming a renter’s market, and rental rates are going up.”

It is not just homebuyers feeling the effects of the increase in home prices. People who rent homes or apartments have seen and will likely continue to see rent increases, Thompson said.

For sellers, the increase in interest rates has slowed the increase in home prices, Jett said. In 2021, home prices increased with homeowners asking more and more, but the increase in interest has created a stabilization in home prices, she said.

“Rates keep going up, and so if the house is priced correctly to begin with it is going to sell,” she said. “People who are overpricing [homes] sit on the market, and so they have to decrease the price to get it sold.”