Possible recession for Texas housing market

With the stay at home orders still in effect, thousands of Texans are doing well to adjust to life. Nonetheless, a good number are the people still scrambling to cover expenses with incomes that were cut off. Housing and real estate experts now say that it is hard to predict what the parallel public health and economic crises will do to the home values and sales.

The economy is hard pressing on brakes, and the home builders are potentially facing the greatest fallout in business in a decade. This is a huge concern for North Texas, which has been at the forefront in single-family construction and sales.

”As you would expect, there has been a slowdown in the traffic counts of prospective buyers,” said Ted Wilson, a principal with Dallasbased housing analyst Residential Strategies. ”While there have been some sales cancellations due to job loss and economic and stock market concerns, they have been minimal thus far.” A lot could, however, happen, between now and when the twin trouble lasts.

”We definitely will have a slowdown, but the question is how much and how long,” said Scott Norman, executive director of the Texas Association of Builders.

This is a sudden twist of events, especially in one of the most dynamic real estate markets in the country. Data from the Texas Realtors show that the state of Texas had so far had five consecutive years breaking the record in terms of the number of houses sold and the median prices. To add, the Texas homebuilding industry had been very solid too, and no other state had more building permits in 2019, according to the Census Data records.

So far, the pandemic has not so much interfered with the demand for moderate-priced homes, which, according to Wilson, is still good.

”Many have pushed the pause button with regard to new acquisition due to the uncertainty of the entitlement process within the municipalities [permitting and zoning] as well as the uncertainty of the duration of this disruption,” Wilson said. ”While Wall Street has

”Many of the large builders I have spoken to are being careful with their cash and want to be opportunistic if there is future fallout.”

Nonetheless, many of the metro areas, including Dallas County, have exempted homebuilders from business shutdowns. In most markets, residential construction is deemed a necessity in many markets, which is very important as repairs and new buildings need to continue.

Slowdowns in the Housing Market Like many other areas, experts see slowdowns in home showings, which are done virtually. They also expect that the permits for new buildings to drop. And the situation may get worse from region to region with the region whose residents rely heavily on the energy and industrial works, like Houston or the Permian Basin or on the cross-border trade, like the Rion Grande Valley expected to see a significant dip in home values and sales.

For places like Houston, there are already fewer people putting homes on the market, but the home values among the houses sold have improved. The Houston Association of Realtors says that the new home listings of the singlefamily homes decreased 4.8% last month when compared with March 2019. At the same time, however, home prices have increased by 3.6%.

”Housing markets will be hit differently depending on the region. Yes, Houston would be hit harder, but Midland-Odessa would be hit even more,” said Luis Torres, an economist with the Texas A&M Real Estate Center. ”Smaller economies are more volatile because they are less diversified.”

”[Regions] like El Paso, McAllen, Laredo and Brownsville will also be hit hard because they weren’t doing that well before the COVID-19 sudden stop, and their economies will also be affected by the recession in the Mexican economy,” Torres said.

Meanwhile, on a statewide level, physical home showings are down 44%, according to Texas Realtors Chairman Cindi Bulla.

”We don’t yet know what percentage of that downturn is a reflection of our members’ commitment to narrowing down selections through virtual showings, sellers declining to allow their homes to be shown, or buyers unwilling or unable to move forward at this time,” Bulla said.

On a positive note, perhaps for the sellers is that the home prices are yet to change. The prices can’t take a dramatic decline. What we should be expecting is a U-Shaped recession and recovery.

This is the situation in Texas. Texas is one beautiful state, with a very stable economy, and in fact, thousands of Californians are shifting to Texas for the incredibly low and affordable housing. If you would like a taste of this beautiful state, talk to one of our VIP Agents in Texas, Johnnie Morine. Learn more about Johnnie here.

https://www.texastribune.org/2020/04/07/ coronavirus-texas-cools-real-estate-marketexperts-dont-know-how-long/ https://www.dallasnews.com/business/ real-estate/2020/03/24/dont-blamehousing-this-time-the-home-market-hopesto-escape-the-worst-of-the-economicdownturn/