A worldwide pandemic and an economic recession have had a tremendous effect on the nation. The uncertainty brought about by both has made predicting consumer behavior nearly impossible. For that reason, forecasting home prices has become extremely difficult.
Normally, there’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Mortgage applications to buy a home just rose to the highest level in 11 years while inventory of homes for sale is at (or near) an all-time low.
That would usually indicate strong appreciation for home values as we move throughout the year.
Some experts, however, are not convinced the current rush of purchasers is sustainable. Ralph McLaughlin, Chief Economist at Haus, explained in their June 2020 Hausing Market Forecast why there is concern:
“The upswing that we’ll see this summer is a result of pent-up demand from homebuyers and supply-in-progress from homebuilders that has simply been pushed off a few months. However, after this pent-up demand goes away, the true economic scarring due to the pandemic will begin to affect the housing market as the tide of pent-up demand goes out.”
The virus and other challenges currently impacting the industry have created a wide range of thoughts regarding the future of home prices. Here’s a list of analysts and their projections, from the lowest depreciation to the highest appreciation:
- CoreLogic: Year-Over-Year decline of -1.5%
- Haus: Year-Over-Year decline of -1%
- Zillow: Year-Over-Year change is forecasted to bottom out at -0.7%.
- Home Price Expectation Survey: Decline of -0.3% in 2020
- Fannie Mae: Increase of 0.4% in 2020
- Freddie Mac: Increase of 2.3% in 2020
- Zelman & Associates: Increase of 3.0% in 2020
- National Association of Realtors: Increase of 3.8% in 2020
- Mortgage Bankers Association: Increase of 4.0% in 2020
What’s happening in the Austin Housing Market?
Here is some cold-hard data that we pulled from the Texas A&M Real Estate Center (Austin-Round Rock MSA, May 2020):
- 12.19% Unemployment
- 2.0 Months of Housing Inventory
- -20.8% Drop in Permits for New Construction Residential Units
- 6,086 Total Listings
- 2,697 Sold
- $329,000 Median Sales Price
With the reopening of the Texas economy, we should see the unemployment rate in Austin, Texas go down. Housing inventory dropped .1 months from last month but is up from 1.6 months pre-pandemic. The drop in building permits indicates that there may be a lack of confidence from most builders in the area OR it’s been tough to acquire new inventory for them to build on. Total Listings are slowly increasing and sold units has been holding steady considering the amount of inventory. And the median Sales Price experienced a dip in April and almost a 100% recovery in May.
We can garner two important points from the above data:
- There is no real consensus among the experts.
- No one projects prices to crash like they did in 2008.
If you’re an Austin homeowner and you would like to discuss what the above data means to you, send us an email at firstname.lastname@example.org.
If you would like to sell your house or other property in Austin, we have a turnkey process and can provide you with a cash offer within 24 hours, sometimes same day.
If you’re not looking to sell your home but you’d like to explore options on how you can overcome an adverse real estate problem, we are still here to help you consider your best options.
In addition to being active in the Austin market, we have several years experience with title issues, foreclosures, reverse mortgages, encroachments, heirship/probate issues, tax delinquency, and much more.
As always, thanks for reading.