Location and timing are always important in real estate, but now timing and choices have especially large effects in Texas.
Texas home sales fell 4 percent in March but still resulted in moderate first-quarter growth, according to a report from the Real Estate Center at Texas A&M University.
The report explains that medium home-price appreciation remained stable, but the statewide stay-at-home orders caused a decrease in potential buyers and sellers.
“The coronavirus outbreak is the greatest threat to the Texas housing market since the 1986-90 recession via disruptions to buyer and seller confidence, the negative income shock, and wariness of visiting and showing homes for sale. Preliminary effects showed in the March data with more significant impacts almost certain to appear during the second quarter of the year,” the report states.
Home prices rose, but home values could erode, said Skylar Olsen, senior principal economist at Zillow Group Inc., in the Wall Street Journal.
“Demand absolutely just got a kick in the gut, but at the same exact time, so did supply,” Olsen said.
“According to our data, people are buying, albeit at a slower pace than what we experienced in the robust atmosphere of 2019,” Cindi Bulla, 2020 chair of Texas Realtors said Tuesday.
“Interest rates are a huge factor in affordability, but just one component of the buying decision. One of the main drivers of buying decisions is employment stability. To the extent we are seeing a slower pace of market activity, we think employment and resulting consumer confidence is the main driver,” Bulla said.
Alexander W. Obregon, Houston deputy city controller said in a statement on Tuesday, “Interest rates are likely to stay low for the foreseeable future. The total unemployment rate for the United States rose to 14.7% in April, the highest rate since the Depression era. So for many of us, the economy is in unchartered territory and it remains unclear when things will get back to normal.
“In Houston, the COVID-19 crisis will cause home sales to certainly fall and a lack of inventory adds to that decline. Many sellers might be unwilling to allow someone they do not know enter their home. For anyone looking to make a big purchase, like a house, there is a lot of uncertainty to navigate and the pandemic is still very much an active event.”
Bulla is optimistic however and said, “Because we went into the pandemic declaration with historically healthy demand and economics, we believe there is good reason for optimism. In fact, the sustained market activity we saw during April supports that optimism.”
“Undoubtedly, the second and third quarters of 2020 will show slow down by comparison to the same time last year, but recovery should be swift as we develop effective strategies against the spread of the virus,” she said. “Much will be driven by how quickly our employment numbers rebound.”
What About Mortgage Rates?
There are many opportunities in this market, including historically low interest rates, Bulla said.
“Buyers should understand multiple components drive mortgage rates, and those can change from minute to minute. My best advice is, if you like it, lock it. Don’t gamble on rates going further down. I cannot overstate the value of engaging a trusted real estate professional to help navigate the uncharted waters of this market.”