April mid month analysis shows North Texas housing market taking a big hit due to COVID-19 pandemic. A comparison of daily activity shows an alarming drop in market activity and value. New listings show a 15% drop from March to April 2020 and a 29% drop year over year. Closings show a 28% decline from March to April 2020 and a 34% drop year over year. Average asking price per square foot has dropped from March to April 2020 More than 10% compared to no change in the same period of 2019. This is going to be rough folks!
We had a strong March start with March month end data showing an upturn in median price, and closed sales. The first U.S. Coronavirus death was March 2nd, As fear has set into the housing market, it is slow to show the damage due to its 30-45 day cycle between contract execution and closings.
What was a pre COVID-19 seller’s market is now flipping to a buyer’s market, as inventory declines and buyers become scarce. But, like the trends of the COVID-19 pandemic, the trends of the housing market overall are tough to predict at this early stage. The silver lining is the drop in interest rates. Averages for a thirty year loan are around 3.3%, nearing an historical low. As you would expect, qualifying for a mortgage loan is more difficult. Minimum credit scores and ratios are tightening. This week, Chase Bank publicly stated they will only consider a credit score of 700 and up for a mortgage loan. Prior to that, a 520 could do the trick.
Data is beginning to tell the story of the North Texas housing market thanks to the COVID-19 pandemic. Spring is typically the busiest time for the real estate housing market, data showing a turn as COVID-19 disrupts the market.
Fears of COVID-19 bring fewer homes coming on the market, some leaving the market, and showings have slowed. Virtual showings have become a showing option where the seller or agent FaceTimes or equivalent to give a buyer a first tour without seeing the home in person. When they do have an in-person tour, the number of people allowed may be limited and some sellers are asking buyers to immediately wash their hands and providing sanitizer, gloves, and face masks for protection.
2020 had started as the best year in North Texas history. With the drop in rates, January activity was up 20% year after year. By the end of March you could really feel the impact. Fewer listings, fewer showings, fewer contracts and clearly a buyer market. Sellers are running scared of losing a buyer. If you have a contract negotiating power is shifting to buyer and mosts demands of the seller are accepted. Competition between buyers is becoming non-existent. With such a unprecedented event, you can’t push people to buy or sell.
It’s hard to predict what the full impact will be, just like we don’t know exactly how long this is going to last. I end every conversation with, ‘take it one day at a time’. I tell my clients if you are a pessimist, don’t list. If you are an optimist, list now to get to the front of the line.