{"id":230605,"date":"2020-05-15T15:32:49","date_gmt":"2020-05-15T15:32:49","guid":{"rendered":"https:\/\/www.tenproperties.com\/?p=230605"},"modified":"2020-08-11T15:36:05","modified_gmt":"2020-08-11T15:36:05","slug":"covid-19-and-the-housing-market","status":"publish","type":"post","link":"https:\/\/www.tenproperties.com\/blog\/covid-19-and-the-housing-market\/","title":{"rendered":"COVID-19 and the housing market"},"content":{"rendered":"\n

TLDR<\/h4>\n\n\n\n

A temporary oversupply, coupled with new-construction incentives, and historically low interest rates, will serve to push this market up quickly. Short term (<3-6mo), I would expect to see some GREAT deals. Once we enter 2021, I fully expect to see rapid price inflation, compounded by economic inflation due to the influx of stimulus currency. If you\u2019re a cash buyer, get locked and loaded NOW. If you\u2019re using financing and are not already pre-approved with a lender, I would start that process ASAP. Lenders are still backed up with all the recent refinances, and due to the uncertainty surrounding loan forbearance, approvals are only going to get harder before they get easier.<\/p>\n\n\n\n

The full story…<\/h4>\n\n\n\n

I\u2019ve had a lot of questions recently about the market, how it\u2019s fared during COVID, and when we should expect a rebound. Local REALTORS\u00ae\u00a0and brokerages like to play up statistics to land you as a customer, as you\u2019ve probably seen plenty of the \u201chousing prices are up, despite COVID\u201d ads.<\/p>\n\n\n\n

Case in point\u2026 Here\u00a0are the March<\/a> and April<\/a> Austin-area housing reports, compiled by the Austin Board of REALTORS\u00ae. Notice the top headlines: Median sales price up. Days on the market down. Sounds great, right?<\/p>\n\n\n\n

Two things to keep in mind\u2026 1. This was March and April, and at the time of writing this, May numbers hadn’t come out yet. 2. Most closings are scheduled 45-60 days in advance, possibly before the COVID quarantine even began. Future months may tell a different story, but I don\u2019t think so.<\/p>\n\n\n\n

While nearly every piece of data I\u2019ve seen shows that sales are down, this isn\u2019t necessarily a bad thing. It just means that most of us stayed home like we were told to. Remember that every sales transaction involves two parties\u2026 both of whom are likely having to move. When buyers dry up, generally an equal number of sellers goes with it, since that seller is most likely a buyer of another place. Nobody wanted to move during the crisis, and so both sides slowed down.<\/p>\n\n\n\n

Inventory<\/h4>\n\n\n\n

What makes a market isn\u2019t the sheer number of buyers or sellers, it\u2019s inventory. When we talk about things like \u201cbuyer\u2019s market\u201d or \u201cseller\u2019s market\u201d, we\u2019re talking about volume with respect to inventory. When both volume and inventory slow-down or speed-up together, the market remains mostly flat. This is probably the single most useful take-away from this article. FLAT<\/strong>. Just because sales are down, that does NOT imply we are in a repeat of the 2008 financial crisis.<\/p>\n\n\n\n

OK, so if it\u2019s not as bad as we think\u2026 does that mean it\u2019s good? Again, let\u2019s go back to volume vs. inventory. Unless required by some external event (like a job change), not too many people are itching to start house hunting, and all the fun that comes with moving, anytime soon. That affects resale buyers and sellers roughly equally, so we can effectively ignore them. The next two biggest players then are Renters and Builders.<\/p>\n\n\n\n

Renters<\/h4>\n\n\n\n

Renters are people moving from a dwelling they don\u2019t own. Unlike resalers who are both buyers and sellers, they are a one-sided ticket that has a non-balanced affect on supply\/demand. Renters (or more specifically, millennials) are reaching home-buying age and are generally expected to surge in the next few years, outpacing volume.\u00a0I follow a really good lending blog, and this recent article<\/a> discusses this trend well.<\/p>\n\n\n\n

Builders<\/h4>\n\n\n\n

Builders were at the biggest disadvantage of the group during this crisis. Unlike resalers or renters, builders can\u2019t simply just decide to not-move. They have a massive investment on the books that costs them real money every day it sits idle. Because of this, I expect to see the greatest deals in new construction for the remainder of 2020. This will also have a short-term over-supply affect, and likely depress resale prices slightly, though I expect them to rebound as soon as the millennials start buying.<\/p>\n\n\n\n

Summary<\/h4>\n\n\n\n

A temporary oversupply, coupled with new-construction incentives, and historically low interest rates, will serve to push this market up quickly. Short term (<3-6mo), I would expect to see some GREAT deals. Once we enter 2021, I fully expect to see rapid price inflation, compounded by economic inflation due to the influx of stimulus currency. If you\u2019re a cash buyer, get locked and loaded NOW. If you\u2019re using financing and are not already pre-approved with a lender, I would start that process ASAP. Lenders are still backed up with all the recent refinances, and due to the uncertainty surrounding loan forbearance, approvals are only going to get harder before they get easier.<\/p>\n","protected":false},"excerpt":{"rendered":"

TLDR A temporary oversupply, coupled with new-construction incentives, and historically low interest rates, will serve to push this market up quickly. Short term (<3-6mo), I would expect to see some GREAT deals. Once we enter 2021, I fully expect to see rapid price inflation, compounded by economic inflation due to the influx of stimulus currency. […]<\/p>\n","protected":false},"author":1,"featured_media":230606,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[36],"tags":[],"acf":[],"yoast_head":"\nCOVID-19 and the housing market - Ten Properties<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.tenproperties.com\/blog\/covid-19-and-the-housing-market\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"COVID-19 and the housing market - Ten Properties\" \/>\n<meta property=\"og:description\" content=\"TLDR A temporary oversupply, coupled with new-construction incentives, and historically low interest rates, will serve to push this market up quickly. 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