The last week has left us all with a sense of home and exactly how important it is as a place to seek refuge. And despite the (large) possibility that we will grow tired of the increased company in the house due to working remotely and no school for the kiddos, perhaps the greatest blessing of all is that we have a home to go to. I am guessing there will be a lot of babies born in October and a lot of celebrating at our favorite restaurants as soon as this is over. Heck, we will maybe even stroll in to the office with a little added pep in our step.
The point? We all understand the gravity of the unique struggles that COVID-19 presents us, and we also realize that those struggles will continue and likely linger long after the virus itself. With That said, I was a bit miffed when I read Steve Brown’s March 18 piece in the Dallas Morning News titled, “Dallas home prices could get hammered by economic shakeout". In short, the articles says that Dallas home prices could be headed down the tubes.
Now obviously as a realtor, I am not going to like this headline even if it were true. But because I am a researcher and an investigator by nature in addition to a fundamentally hopeful and optimistic individual, I decided to dig a little deeper to properly formulate my own, educated opinion. Brown references a December 2019 Fitch Ratings article to form the basis of his opinion. For starters, how does anyone compare those times to now? As if I need to remind you the difference a week can make much less a couple of months.
What did I find when I did my own research? Recent findings.
According to a National Association of Realtors Flash Survey conducted THIS month (March 9-10, 2020) with over 2,500 responses from agents around the country, the findings were that 78 percent of realtors reported no change and 87 percent had seen no change in the number of homes on the market to date.
It is critical to understand that Dallas had low inventory before COVID-19. For example, inventory in both the Park Cities and Preston Hollow were down 43.2 percent and 56.8 percent respectively from last year’s market inventory. Simply put, there are just not enough homes on the market to fill the demand.
75225 Graph Below: Number of Homes For Sale vs. Sold vs. Pended (Last 2 years)
75230 Graph Below: Number of Homes For Sale vs. Sold vs. Pended (Last 2 years)
75205 Graph Below: Number of Homes For Sale vs. Sold vs. Pended (Last 2 years)
I know a lot of people are associating this with both September 11 and the 2008 financial crisis, and I have been in the industry long enough to have experienced both. If I had to say which this is more like, I would have to go with 9/11 as we are currently in a state of controlling the damage and trying to get ourselves stabilized. This financial crisis is NOT a bubble of excess, but instead it is more like the plumbing of the financial markets being momentarily out of order. We are currently in a period of shock and will soon move to stabilization and eventually on to recovery.
Even still, I think the Dallas real estate market is a great place to live and invest. The stock market is set up to be volatile, and they are not making any more land. With interest rates being as low as they are, I actually do not see how real estate is not THE BEST place to invest. Home sales are not going to be eliminated they are just going to be deferred. In two to three months when all of this is hopefully behind us, there are going to be a plethora of people wanting and needing to buy and sell.
The reason Brown’s article got under my skin is because it was an attempt to instill fear into the market by spreading doom and gloom on the worst that COULD happen.You know what I predict COULD happen? I truly believe the resiliency of humankind will prevail and that while this might appear to be a heavy STOP for many industries (not just real estate) that we need to remember that it could simply be a PAUSE.
I’m leaving you with a quote from Kathy Fettke who is the co-founder and co-CEO of RealWealth. Take a moment to think about it in the wheelhouse of what we are dealing with at the moment.
“The bottom line: investing in real estate is smart because property is tangible. People always have, and always will, need shelter. This means it is very unlikely that our need for shelter will ever go away.”
What are your thoughts? I would love to chat about it. In the meantime, wash your hands, Facetime your friends, and help a neighbor in need.
Always just a phone call or a completely sanitized showing away- Christy