Updated: Apr 9, 2020
March 14th - 119 pending / day - Market Crash
March 24th - 107 pending / day - Shelter in place order
April 1st - 79 pending / day - Day of this video
Active Single Family Homes
February - 1,146
March - 1,297
April - 1,297
Close Price / Original Price Ratio: 100%
Average Days on Market 5 - 6
Normally each month we compare the Austin market to the national one. Covid has everything upside down so instead I'm going to write about where this could all go and what we are watching.
All of the stay in place orders have been turning real estate off an on in terms of being able to even show houses. It was banned for a while and has recently been lifted, but as you can see from the video activity is down in a time when it would normally be increasing. Everyone is a little scared and hesitant. This has created a pull back in buyers and as such instead of getting multiple offers on every listing, we are only getting one at a time which means to get under contract sellers are even taking small discounts which is normal in a balanced market. So there is opportunity for buyers to actually win an offer at a price slightly under list which was much harder just a month ago.
Our inventory in Austin is still very low. For a market our size, we need about 4,500 homes for sale to be in a balanced market which we haven't seen since 2010. Covid certainly hasn't brought more sellers to the market either because they want to wait for this to pass before going on the market. So both buys and sellers have pulled back simply creating a new, lower equilibrium.
Now you may be hearing that this is going to be the second great mortgage crisis because unemployment is through the roof and people won't be able to make their mortgage payments. There is some logic to that, but here are the reasons why the sky may not actually be falling.
1) Unemployment is artificial
People are not out of work because the demand for good and services is not there. Covid is putting them out of work. Once the virus passes it all depends on how quickly it does and how quickly the economy hires back those workers. It is likely to be slower than they were fired, but also much faster than a typical recovery.
2) Bailout packages
While printing money ultimately break economies, up to a point it doesn't if it can be successfully deleveraged later on. Between the possibility of mortgage deferments and direct payments to people to help cover their mortgage, there is some chance that the default rate may not go up as we expect. The big date to watch will be April 15th which is when most mortgages will be considered officially late.
3) Home Equity