What strange times we're living in. It feels like every day is a whole new reality. We expect you're probably being bombarded with information right now. This email is to offer some context on how COVID 19 is currently impacting Austin real estate, and some thoughts about what we expect to happen next.
So far, Austin real estate has still been moving and we have not yet seen any significant impacts on pricing or inventory. As of the weekend of March 14th and 15th, there were still multiple offer situations happening in Central Austin. We had clients making offers, so we were in direct conversation with several different agents that weekend who were negotiating multiple offers for their seller clients. Although we did not directly participate in making offers this past weekend, March 21st and 22nd, the MLS numbers suggest that contracts are still being written. There were several hundred homes in the city of Austin that went pending this weekend, many with less than a week on the market.
The interesting challenge for us right now is that we often rely on old data when watching the real estate market. For example, we'll look at the month-end final numbers from 30 or 60 days ago to understand what's happening. As of now, because conditions are changing so fast, we're exploring new ways to stay on top of the market data on a daily rather than monthly basis. We'll be looking at several metrics.
How many properties are going pending? This will help us interpret whether real estate in Austin continues to trade during the shelter in place orders being announced today.
How many properties are being taken Temporarily Off Market, or Withdrawn? This will help us understand what may happen with listing inventory. More on that below.
Is listing inventory going up or down? Generally, if listing inventory is up, meaning there are lots of homes for sale, we will move toward a market where buyers have more negotiating power. We will likely see longer days on market and more price reductions.
If listing inventory goes down, on the other hand, there are fewer homes to choose from. As long as buyers are still buying, that will give sellers negotiating power, drive days on market down, prices up, and encourage multiple offer situations.
All that being said, we're in uncharted territory. We may see a drop in listing inventory and a drop in buyer demand simultaneously, for example. There would have been no reason to even consider that possibility a few weeks ago, but given economic uncertainty, restricted movement around the city, and the other new realities we're all figuring out, it could happen.
Based on what we know today, here is our advice for our clients.
For buyers: this is a good time to be making offers, if you feel financially comfortable with that. If you have cash, want to invest, and have been waiting for a moment when buyers actually have some leverage in Austin, here we are. We have some buyer clients who have already wisely taken advantage of this opportunity, and negotiated deals below asking price on homes that I would normally expect to be multiple offers above asking price. Understandably, sellers are very uncertain about what the coming weeks may bring, and are more inclined than usual to make a deal to get under contract. This is particularly true if they need to sell for one reason or another. So if you are comfortable making a purchase, don't mind evaluating the home based on a video and plan to hold the home for a few years, this may be a good time to buy. The reason I say "plan to hold the home for a few years" is because we don't know yet what will happen to prices in the coming months. More on this under "For Sellers". We would also suggest using the COVID addendum recently released by the state of Texas to alleviate any concerns you may have about worst-case scenarios that may unfold because of COVID (such as quarantine, illness or job loss.)
For sellers: We are keeping a close eye on the market, but are not currently advising sellers to rush their properties onto MLS. We really want to see what today's announcement regarding shelter in place brings. Will real estate sales be deemed an essential service? Will properties continue going under contract? If so, then selling now may be a good idea. We do not yet know if we will see prices hold steady or go up in a few weeks when COVID restrictions are lifted, or if we're headed for a longer-term market shift toward a buyer's market. If we're headed for a buyer's market, then it's probably wise to put a conservative listing price on your home and move it before the economy worsens. If instead, we're going to see a temporary pause to market activity, followed by a spike in demand in a few weeks, then it's wise to wait. And a big part of this decision has to do with your personal situation. If you'd like to discuss that, we're happy to.
What about a refinance? Mortgage interest rates are low right now, and many people are wondering if they should refinance. It may be worthwhile to do so, particularly if you have PMI and could now drop it off your payment. That being said, everyone and their dog decided to refinance in the last few weeks, so lenders are busy, as are title companies, and appraisals are several weeks out right now. If you'd like our list of recommended lenders so you can call one and discuss your situation, just reply back.
What we think overall: Overall, we expect Austin real estate to weather this challenge well. Texas, in particular, is strict about lending, so we are not over-leveraged. I believe we learned a lot of hard lessons in the last recession in 2007/2008, which was very much connected to real estate and impacted prices drastically in some markets. Even then, Austin's real estate did relatively well. The reality remains that we do not have enough housing for all the people who want to live here. So I am cautiously optimistic that our market will remain strong. I do believe we are seeing and will see a window of opportunity for buyers that they haven't had for years in Austin. I just don't know how long it will last.
We'll continue to keep an eye on things and share any insights we believe will be helpful for you. While we are still open for regular real estate business, (like writing contracts) we also believe that our clients and our community need something a bit different from us right now. We're still trying to figure out what that is and what that looks like. But for now, please know that we are here to help, here to advise, here to support the small business owners who are struggling, and looking for creative ways to be of service. We know that much of the work we do in the coming weeks will not result in writing contracts, and that's okay with us.
Some projects I'm currently working on include:
-A free business planning workshop for female entrepreneurs
-An effort to create support for small business owners in my network, which will probably include a game of some kind.
-Posting compulsive helpfulness to Facebook
-Making myself available to advise people who have not previously worked from home on how the heck you work from home and get anything done.
So please don't feel that you can't lean on us just because you can't promise a commission check is right around the corner. Frankly, this is always true. Current circumstances have just made this even more important, and more obvious than usual.
Thank you for your business and your support. We wish you and your family peace, joy, gratitude, and small blessings to get you through your days.
As always, best wishes!
-Isabel and the Funky Homes of Austin Team