How Has COVID-19 Impacted the Housing Market?
At the start of this year, the housing market was white-hot, particularly in the Austin area. At that time, there was a two-week inventory of homes, and builders were working furiously just to keep up with the pace of demand.
In fact, all three months of the first quarter saw year-over-year increases in statewide home sales across Texas (according to data produced by the Real Estate Center at Texas A&M University).
Now, with summer approaching – typically the hottest time for real estate transactions – many are wondering what impact COVID-19 and the related social policies are having on the housing market. To gain an insider’s perspective, we asked Austin-based real estate expert, Mark Strüb, of STRÜB Residential Group, to provide his insight on the market along with some tips for both buyers and sellers.
To start things off, we asked Mark about the housing market in general in a year-over-year comparison.
“Certainly, there are fewer homes for sale as compared to this time last year. That means prices are going up as simple supply-and-demand economics are at work with, so far, little drop-off in the number of buyers. At STRÜB, we are seeing multiple offers and quick sales on any home that is priced correctly – and pricing is the key. A well-priced home can sell in virtually any market. At the moment, the primary reason for the lower inventory is simply the health and safety concerns around showing homes.”
When asked about his forecast for the market over the coming summer months, Mark had this to offer:
“The Austin market is already starting to climb out of the inventory dip brought on by the uncertainty of the pandemic. There was a period in March when showings ground virtually to a halt. Those weeks will show up as a dip in home sales for April. The second half of April, however, has a lot of contracts being written for May closings, which continues to show the resiliency of the Austin market. For nine years in a row, Austin has been the top city for relocations, and that trend looks to continue for the foreseeable future.”
What information should buyers, sellers, and investors understand about the current housing market?
“For those with the ability to buy, right now may be the best time to do so in 2020, especially in Austin. With relocation buyers currently sidelined due to COVID-19-related complications, there is a little less competition locally. Particularly for buyers and investors, there are some good opportunities currently available on the market. For buyers and sellers, you should be selective in choosing a Realtor®. According to the National Association of Realtors®, 87 percent of agents in Austin don’t stay in the business for more than five years. For anyone buying or selling their largest asset, you want an agent who knows the market very well and can guide you all the way through.”
What About Mortgage Rates?
Another real estate related topic garnering much attention is mortgage interest rates and the subsequent surge in refinancing. Due to the economic stress and equity market volatility, interest rates have dropped significantly over the past several weeks. This change in rates has created an opportunity for many homeowners to refinance their mortgage, lowering the interest rate, payment amounts, and perhaps some stress.
To add insight to this topic, we’ve asked mortgage lending experts, Russ Laing and Sonya Valia from Vista Lending, for their input.
Sonya responded to us initially with some thoughts on the present environment:
“Interest rates on all mortgage debt is at an all-time low and, like the stock market, is extremely volatile. Our goal for our clients is to first understand a rate and term that meets their needs, then monitor the market and inform our clients when the terms are favorable.”
Currently, the team at Vista Lending is encouraging clients with mortgage rates on primary residences of 4 percent or greater to investigate refinancing. Sonya added:
“What loan makes a good refi candidate depends upon the breakeven point to recover fees and the long-term savings delivered by the lower rate. We look at all factors when guiding our clients.”
With his take on what the future may hold, Russ Laing offered this perspective:
“There is a misconception that rates may lower, but there is actually upward pressure on rates currently. Because mortgage servicers have cut rates, alongside a big jump in forbearances, rates just don’t have much room to drop any further.”
Sonya closed with some words of advice for potential mortgage refinance shoppers:
“If you determine that a refinance may be good for your situation, be sure to evaluate lenders for rates and total fees, as well as a good service experience. All three factors should be included in your decision making.”
At Slaughter Associates, we have helped many clients recently with home buying, mortgages, and refinance situations. From managing money movements to maximizing debt opportunities, we can work alongside you and your real estate and lending experts to make sure the transaction is as smooth and beneficial as possible.