With Covid-19, aka Coronavirus, sending many Texas cities & counties into shelter-in-home orders and expanding daily, we felt compelled to provide insight into what we are seeing in the Houston housing market currently, what we are forecasting, and how we are strategizing to combat any negative repercussions the virus has brought on to our society and industry.
First, and foremost; we are still working in full capacity. Real Estate Services were deemed ESSENTIAL. Closings are occurring daily, just in different settings and procedures. Listing appointments are still flowing in, with roughly only 10%-15% of homeowners deciding to wait until the dust settles, and shelter in home orders are lifted.
Buyers are still actively looking for homes, motivated by historically low-interest rates and the belief for “opportunity purchasing power”. Similar to sellers, there are roughly 10-15% of our buyers postponing their searches due to uncertainties, and only a select few pulling out of their search due to job-related uncertainties.
Below are a few of our opinions taken from market upsets of the past, and what we are actively observing daily;
Market Conditions & Consumer Sentiment
“Should I list my home with the uncertainties of the Corona Virus?”
- The immediate concern with Covid-19 is the availability to see/show homes. With Open Houses canceled, some Houston Builders closing their model homes, & some buyers postponing their searches, digital marketing to enhance online presence has never been more important.
- Historically, median home prices have remained non-affected, and even risen during economic crisis’, only decreasing during 2 out of the last 5 major recessions (1991 & 2008). Even when decreasing, material values tend to take 18+ months to reveal a downward trend. Economic Recessions do not necessarily mean Housing Recession
- While we don’t have a crystal ball, we see 10-15% of buyers remaining on the fence with their purchase decision, mostly due to the fear of uncertainty, which was already anticipated being an ELECTION year.
- There will be penned up demand. Billions in investment funds are sitting on the stock market sidelines, and will eventually be leveraged to increase lower returns and positions for investors. Home Buyers will be spending more time DIGITALLY searching for homes in their downtime, and for the ones holding their search temporarily, demand will be released.
- Historically, home markets that experience a quicker impact on values during an economic crisis are Secondary Homes, Vacation Homes, Luxury Homes, Commercial Markets, & Investments.
- The immediate concern we have for our sellers lies in the buyer's ability to secure financing. We anticipate loan guidelines to tighten, for instance, higher required credit scores.
Our advice; There is always something people will panic over. Make smart, rational decisions based on the information at hand, as well as your desired goals. Our brokerage is still closing homes, taking new clients daily, and seeing overall a healthy morale amongst our clients. The one takeaway is that it is ever more important to seek counsel from a trusted RE professional and determine if it is the right time to put your home on the market. Every situation is different!
“Is it the right time to purchase a home during the coronavirus epidemic, and what are some tips on purchasing during times like these?”
- While it will take some time for concrete data to come in (3-6 month average purchase process, 30-45 days from contract to close), empirical data shows us that both buyers and sellers become more motivated when potential future market concerns arise.
- We are still seeing our listings go under contract within below average days on market in many areas, and our buyers are still actively looking for homes, especially with interest rates touching historic lows.
- As mentioned before, the homebuyers that will typically hold back in times like these will be in the vacation home market, luxury market, commercial market, & investment markets.
- As always, it is imperative to focus on homes that provide quality through their location, neighborhood, school district, & other key factors that will always hold value in comparison to homes that may not stand out in times of volatility.
- With rational decision making, great opportunities can be capitalized on during the worst of times, as well as the best of times.
Signs to watch for: Our main focus remains on job security and mortgage loan guidelines. Simple enough, job security is a pillar of borrower qualification. Without jobs & qualifying income, buyers can't obtain financing. It is difficult to predict a consumer's emotional reaction to any type of major situation in their lives, as people react differently to situations at hand.
Loan Guidelines: There are changes daily in our government's approach with policies and the current challenges our economy faces. We can likely expect government-backed loans (FHA, VA, USDA) to tighten their guidelines. Higher requirements for FICO Scores & Lower Ratio Requirements to DTI potentially. While speculative, we can expect some changes.
Tips: Continue to search for neighborhoods and areas with a strong appreciative growth opportunity. Don't buy for what you think is "a deal", but focus on QUALITY of home and location. Be smart, seek counsel from your real estate professional, and always remember, our economy's markets, both stocks and homes, are built to rise and flourish. There are still many uncertainties
This too shall pass. Enjoy time with your family.