By Frank Zuniga, Realtor for Greg Weber Realtors, Inc.
August 27, 2020. This is the question that realtors most often get asked. Unless you were living under a rock for the last 5 months, you know the pandemic of covid-19 has greatly affected the United States and almost every other country on the planet. Covid-19 has greatly affected the market because it created a ton of uncertainty. Uncertainty causes people to slow down and put off what they would normally be doing otherwise. That is what we’ve seen across the country and here in central Texas. The big restrictions for the pandemic started in March and then by April we saw a historic Austin area drop of 21 percent for resale inventory. (Resale inventory are homes have already been lived in that are now being sold). That drop was actually a few percentage points less than the national average. It shows that people put off selling their homes and there are also stories of sellers that already had homes listed and cancelled those listing contracts.
Now after the end of July 2020 we can see that active listings in the area have fallen from 7197 in July 2019 to just 5309 in July 2020. That is a 32 percent drop! During that same time frame the median price rose from $325,000 to $353,000. That is a whopping 10 percent increase in just one year! So is this just attributed to supply and demand and because supply went down then prices went up? That is certainly part of it but it doesn’t tell the entire story according senior economist George Ratiu from Realtor.com. Ratiu describes it as a catch-22 situation because home sellers also become homebuyers once they are committed to sell their current home. These people are now more reluctant to sell because when they start looking for their next home they see less inventory to choose from and whatever is available is a lot more expensive. Ratiu also mentions that 5 million millennials are turning 30 in 2020. This is the age when people historically begin forming households so their desire for homeownership increases and adds to the competition for homes. This demand creates those rising prices.
Austin Board of Realtors President, Romeo Manzanilla recently said, “July was a very encouraging month for the Central Texas housing market. Strong home sales, combined with an increase in new listings and pending sales, are important benchmarks when analyzing the health of our market. A healthy housing market is vital to the overall economic recovery in the region, and with two consecutive months of positive numbers, we are growing more confident that this is sustainable and can help be the spark that gets our economy back on track.” Despite the 13 percent increase in new listings and the 32 percent increase in pending sales in July, Manzanilla, he mentioned the concern about the “dangerously low inventory” which is of long term concern. He said that low inventory and continued demand have created a strong seller’s market. He also encouraged home buyers to seek out and find Realtors to work with so they can create the best strategy for creating winning bids in this competitive market.
We can’t have a complete discussion on this topic unless we also mention the historically mortgage loan interest rates. With interest rates at such low rates, it’s almost as if buyers can turn back the hands of time and go back to an era of the lowest interest rates in their lifetime. Low interest rates translate to lower monthly mortgage payments. Some home buyers see the low interest rates as a way to get a nicer and bigger home with more amenities for same cost when interest rates are higher. So if we can sum it up with one word, low interest rates translate to an increase in opportunity. However, low interest rates also come with an increase in lender scrutiny. Lenders have to be more careful and dig deeper when reviewing each mortgage applicant because they are now operating on razor thin margins and it take more good loans to make the same money they used to make before. Also, just a few bad loans with these super low interest rates can spell disaster. The real winners will be home buyers that are well positioned financially in order to make it through the tough scrutiny and end up getting approved for a mortgage loan.
Big Opportunities with Brand New Homes
If you’re trying to buy a home at this time, one of the best solutions is to buy a brand new home. There are over 5000 brand new homes in the Austin metro area that are in all stages from completed, construction in progress, or in the planning stages. New homes are fully cleaned and sanitized once they are finished being built. Brand new homes also come with warranties for appliances and major components like water heaters, air-conditioning units, roofs, windows – just to name a few. So you’ll be able to spend your time enjoying your home instead of fixing it. In an upcoming blog I will go over how homebuyers are changing their requirements lists about what they want in a home. Perhaps you’ve already heard about the migration from dense urban areas to lower density suburban areas but that is just one aspect. Home buyers also want their home to be larger and end up with features that are now more important to them than ever before. One economist recently described it as buyers wanting Swiss Army Knife homes that come with many features and can accomplish many things. Just check back here for those upcoming blog posts where I go over these new home buyer desired in more detail. Also, you can do your own home search of the most updated status on brand new homes in the Austin metro area on my website that is partnered directly with the new home builders. Check out all the news homes here.
Click the image below for the Austin-Round Rock detailed statistics.
You can always contact me at: firstname.lastname@example.org. You can also contact me here through my website at: brandnewtxhomes.com. Just go to the homepage and you’ll see a contact form or go to the menu and click on the contact page.
This article included information from an interview by ListReports.com with Realtor.com senior economist George Ratiu, dated August 10, 2020. It also included information published by the Austin Board of Realtors with the July 2020 market report for the Austin-Round Rock MSA. The MSA includes the 5 county area of Travis, Williamson, Hays, Bastrop, and Caldwell counties.