Welcome to Tall Expectations.
This is the first of what you can expect to be a regular newsletter that will help you be better informed about your home and future real estate endeavors. Today it’ll simply be the topic of the time (COVID-19) and how it may affect our home values and other real estate investments.
Thank you for being a part of it and may God continue to bless you!
How Will COVID-19 Affect My Home & Property?
Unfortunately, nobody knows anything definitive yet because we are in uncharted waters. However, there are some changes you can expect as the economy enters a new phase and other factors that may influence how we should approach the current real estate market. Let’s discuss a couple of them.
As you know, there’s more than just a pandemic happening. Oil prices have dropped dramatically in recent weeks due to a price war between Saudi Arabia and Russia. You can learn more about the specifics here but suffice it to say, this impacts the economy in a significant way. On the plus side, people will pay less at the pump. On the negative side, entire industries are being turned upside down and it reaches deep into our Texas economy. Between the unknown of COVID-19 and the reach of a major industry shakeup, we should expect a curb in the seller’s market we’ve experienced in recent years. How significant that curb will be is yet to be known.
As we learned in the recession of 2008 and the years following, people can quickly get upside down if home values diminish rapidly. Here are some actionable suggestions:
- Talk to your realtor (I hope its me but if not, talk to them) and get an honest assessment of your home’s value from time-to-time while maintaining an eye on your mortgage balance.
- If you are planning to move in the next few years, make plans for the worst-case scenario (extended recession or depression driving values downward) and for the best-case scenario (all of this goes away and we rebound quickly) to avoid potential roadblocks.
- Try to save some money for emergencies. This feels like a big ask for people struggling to pay their existing bills but we can be creative. Here are some ideas for saving money on a tight budget.
- Finally, mortgage rates are at a historic low and refinancing my be an option for higher-interest borrowers. Here are a couple of refinancing calculators here and here that may help you decide if it makes sense for you.
How Real Estate Sales May Change
It doesn’t take a great deal of special skill to sell a house in a hot housing market when the economy is humming. Whether we enter a different market situation or not, some things are different and may perhaps change how we do business going forward. For example, Texas Realtors have formally requested that real estate services be considered “essential” during this crisis. Other considerations:
- Technology has affected real estate more than any other factor in the last decade. The advent of syndicated websites (ex – Realtor.com, Zillow.com, etc) has dramatically changed how people engage with the market. In the current crisis, virtual open houses and property tours are beginning to be a “thing” (and even a necessity for some). I am recording my first tomorrow and will report back on its impact but as people keep their social distance, others still need to sell their homes and/or buy their next.
- We need informed understanding of local markets and how the national and state markets affect them. Here in Central Texas, we tend to feel less of the extremes because people continue to move here in large numbers but we’re not immune to downturns. Factors like average time on market, current inventories and median sales prices are all fine indicators. Watch them over time and consider spring/summer are generally busier. You can see the latest Burnet County report from the Highland Lakes Association of Realtors below. We will watch how the next few months unfold and try to tell the story.