Big Changes
What a difference 30 days can make! In the last month we’ve seen many positive developments in both real estate and the local Texas economy. While Loan Ranger Capital continuously monitors the economy, the recent economic data is far more optimistic than most expected. This is especially true of real estate. The global effects of COVID-19 are far from over, but we see trends going in the right direction and are very confident in residential real estate. Just last month, many talking heads and sensational news headlines attempted to draw parallels between the current environment and the most recent “Great Recession.” Despite this, our stance from the start has been that our current situation is fundamentally very different, and that we would not expect a large change in real estate values.
What Now?
Many are now surprised that the opposite happened, we’re actually seeing an increase in real estate prices. While sales volume did drop significantly last month, we’ve seen an uptick in the past two weeks. At the same time new homes listed on market have remained similar. Without an equal increase in new listings, the supply of homes has started to drop. In Austin specifically, the amount of homes that went under contract were 32% higher than new listings over the past week. Of these listings that went under contract in the last week, 47.4% of those were on market less than 2 weeks. This low supply is exactly why we’re seeing upward pressure on home prices.
COVID and the Effect on Texas
Much of this is also due to Austin’s already strong and diverse economy, as well as Texas’s quick action on pro-business measures. Prominent real estate economist, John Burns, agrees with this. He has named both Austin and Dallas as markets that are poised to outperform the rest of the country going forward. Texas has been very fortunate in many regards, but especially in how COVID affected the population. As of this writing Texas had the 40th highest deaths per capita. It also had the 41st highest cases per capita. This played a significant role in getting the economy functioning at a higher pace quicker. Unemployment claims are significantly lower than most of the country as well. Using April data, the Department of Labor estimates the unemployment rate is 6.2%.
At Loan Ranger Capital we pride ourselves on being there for our borrowers. If you have any questions about how COVID may affect real estate feel free to reach out.