Looking at Dallas 2020 real estate activity to date, we are witnessing the tale of two markets – the supply and demand, and standard showing practices we have used for years, prior to COVID-19 shelter-in-place; and the reduced demand due to the virus, and our attempts to show properties virtually through all kinds of social media.
Additionally, investors have all but shut down the jumbo lending market, as lenders navigate through the everchanging “new normal”of pay cuts and job furloughs, to keep the real estate market alive, while many continue to shelter-in-place. As I mentioned in the Winter Breeze, after a sluggish 2019 Q4, first-quarter home sales began with a bit of a tailwind. January and February, while typically not the best
months for real estate, proved to be really strong. Pre-owned homes sales in North Texas were up twelve percent and prices rose eight percent in January, due in large part to near record-low mortgage rates, down significantly from the previous year.
Fourteen homes changed hands in Northwood Hills during 2020 Q1, compared to just three during the first quarter in 2019. But it should be noted that only two of the 2020 closings occurred between March 15 th and March 31 st . What does this mean for our market moving forward? That seems to be the $64M question. According to Todd Teta, Chief Product Officer with ATTOM Data Solutions, “It is too early to tell how much effect the Coronavirus will have on the housing markets across the country.” Dallas County was listed, however, as one of the least at-risk counties with a population over 500,000.
Counties are ranked based upon the number of homes receiving foreclosure notices, percent of homes with an LTV [Loan to Value] of 100 or greater, and the percentage of local wages required to pay for major homeownership expenses, according to the data. That said, I sat in on a webinar by Dr. Jim Gaines, chief economist of the Texas A & M Real Estate Center. He believes the real estate industry might just be the stimulus to get our economy jumpstarted. His many graphs demonstrated the impact of the government-mandated shutdown of the economy. Yet the graphs only included information through mid-April. He anticipates the numbers to worsen before they improve. Consumer confidence has dropped by 33% since January across the country. Gaines believes the Texas real estate market is experiencing pent-up demand, and the traditional Spring selling season will shift from March-April-May 2020 to June-July-August.
The degree to which the market bounces back will be a result of how quickly jobs return and life gets back to some semblance of normalcy. After what is expected to be a very sluggish Q2, he anticipates Q3 and Q4 numbers to tell the tale. Beyond 2020 Gaines hopes that during the next twelve to eighteen months, real estate will rebound in Texas, and more specifically DFW.
In order for that to happen, we need to do everything possible to keep the Coronavirus in-check so we don’t experience an increase or relapse of cases. Social distancing, wearing masks and gloves and sanitizing are practices that
should become the new normal for all of us!