How will the Covid-19 Shelter in Place Order affect Real Estate in Central Texas?26 Mar Matt Prewett
With the onset of the Shelter in Place Order by City of Austin, Travis County, Williamson County and now Hays County, many people are wondering how this will affect the Real Estate market in Austin MSA and Central Texas. While Real Estate is categorized as an “Essential Business”, the Austin Board of Realtors issued a Statement today (click here to read) strongly discouraging in-person showing appointments.
In the short term, this will seemingly slow our market until April 13 or likely beyond, until the Order to Shelter in Place is lifted. However, we also anticipate that this may delay new listings from coming on the market until the Order is lifted, and then we will see a flood of new listings hit the market thereafter.
Looking further out, how might this affect our market? Despite the Gloom and Doom we often hear on the National news, we are confident that the Austin/Central Texas market will remain healthy and stable. Residential Real Estate markets are very localized environments; what happens in New York City or LA generally doesn’t affect our local real estate market here. The Austin MSA and Central Texas Real Estate markets have been a fascinating study in simple macro-economics over the last decade: High Demand + Low Supply à Rising Prices = Seller’s Market.
The question to be answered seems to be: What will deter the population boom we have been experiencing in Central Texas in recent years? Will the Shelter in Place Order do so? Will job losses & assets devaluation as a result of the stock market and oil market contractions
slow the demand for housing in Central Texas? Or might those result in more supply of housing coming on the market via foreclosures or short sales over the course of the next few months or couple of years?
While it is difficult to predict all of the fallout of this unforeseen pandemic, and we are certainly cautious to be too cavalier with our predictions for the future, we feel optimistic that our Real Estate market in Central Texas will behave similarly to 2008/2009, when Forbes rated us the #2 market in America (behind only Raleigh-Durham) to ride out the recession. We anticipate experiencing a short slowdown over the next month or two, followed by a deluge of new listings & inventory once the Order is lifted. But it’s worth noting that due to Annual Market Cyclicality, Springtime also tends to be the hottest selling season of the year in Central Texas, so we can anticipate there should be plenty of Buyers to purchase the new supply of homes on the market, and soon we will be back to the same imbalanced “Seller’s Market” we have experienced in Central Texas over the last decade.
It's also worthwhile to note that the last two weeks have seen some of the most volatile market for interest rates in many years, but that seems to have stabilized a bit this week, especially once the Fed announced “unlimited Quantitative Easing,” meaning that the Fed will now buy as many mortgage-backed securities as necessary to keep mortgage rates low. In other words, the Fed is addressing the liquidity crisis and it is working so far, as interest rates are significantly lower/more stable this week than in the two weeks prior.
In summary, let’s hope this Shelter in Place Order “flattens the curve” of Covid-19’s spread. While the short-term challenges will be painful for all of us, we are confident that the long-term outlook for the Austin & Central Texas Real Estate markets remains positive!