How is the COVID-19 Crisis Affecting Austin Home Buyers?
The COVID-19 crisis has and is affecting the Austin real estate market in a number of ways. While there's no "one size fits all" approach to the crisis, we have been dealing with a number of common issues. If you would like to discuss your specific situation, please let us know, and we're happy to discuss over the phone, video, or safely in person.
Are There Still Multiple Offers on Homes?
The good news for buyers is that multiple offers have slowed considerably. We do still see multiple offers in hot sub-markets, but those have also slowed. Austin's market was incredibly tight pre-COVID and we would see 10+ offers on properties that were in high demand. Those same properties may now see 2-3 offers. Many properties now do not see multiple offers and buyers can now make offers below asking price and expect a response from the sellers. Your experience will be determined by which sub-market you are searching in. A luxury listing in Westlake will have a different set of buyers than a median priced home near the Domain, for example. We will update with hard data as it becomes available.
How Are Homes Shown?
The pace at which homes are shown has slowed considerably. This is out of necessity, but has not hurt buyers' ability to successfully find the right home. In general, vacant properties can be shown at your convenience, but we do run a more detailed market analysis and provide all disclosure documents ahead of any showing. (In the past, it was somewhat of a mad dash to view homes as they were listed.) Occupied properties are usually shown by appointment, as sellers now set schedules so that they can safely leave the home and disinfect it upon their return. We are always happy to accommodate virtual showings, as well.
Are There Many Homes on the Market?
The not-great news is that the number of homes on the market has been reduced. There was a rush to list homes in late March as the crisis began, but that seems to have subsided. March 2020 saw 20% fewer active listings than March 2019. Generally, when a market slows, there are more active listings on the market since it takes longer for homes to sell. This crisis is unique in that many buyers and sellers have simply hit "pause". As shelter-in-place begins to lift, we do expect more listings to enter the market and we will be able to get a true view of inventory at that time (inventory is a function of units on the market & buyer demand.)
Are There Good Deals Right Now?
Yes, however, overall pricing hasn't changed much and historically doesn't change during recessions. That said, your experience making offers on homes will likely be much more pleasant than it was pre-crisis (see "Multiple Offers" above.) You will likely have less competition now and there is a good chance that you can offer below the list price (if a home is not newly listed and/or has no competing offers.) We do consider this a good deal for buyers. There will be a small number of desperate sellers who will panic sell at a low price. To take advantage of this situation, buyers must be willing to be flexible on their "wants list" and be willing to make fast and strong offers. In these situations, sellers are choosing to trade a lower price for an easier sale.
Are Closings Delayed?
Closings have not been significantly delayed. Title companies & lenders have done an excellent job adapting to the crisis. You will not have a problem scheduling an inspection or getting an appraisal on time. If there is a delay due to COVID, sellers are largely very understanding and will generally allow an extension to accommodate.
Have Lending Guidelines Changed?
In general, guidelines have not changed significantly. During the 2008 financial crisis, guidelines tightened considerably as a correction to the loose lending practices leading up to the crisis. Lending guidelines have been reasonable and consistent during the last decade, so there is not a large correction that needs to be made. That said, credit score minimums have increased slightly. The jumbo market ($510,400+ borrowed) has tightened up noticeably. The jumbo market is fragmented, so larger loans now have even tighter guidelines. Since there are many variables in play with regards to lending guidelines, we recommend that you have a discussion with your agent and lender early on.
If you would like to discuss your specific situation, we would love to help. We are happy to connect over the phone, video, or safely in person.
What Are We Seeing in the Market?
Some buyers are expecting huge discounts, but those are rare exceptions. Inventory is low and there are still a lot of buyers in the market. Homes below $600k have the most demand and we’re still seeing multiple offers, so we have to put together competitive offers. The mortgage market is tightening approval guidelines, so a bigger down payment is a good way to make your offer stand out. Sellers and listing agents are more skeptical than ever of out-of-town lenders, so going local will also help.
I’m working with buyers right now who have their properties under contract. There’s a lot of anxiety over whether or not those deals will close before they’re willing to buy something new. The local buyers are fortunately all in good and stable situations where they don’t have to move, so they’re taking their time to make sure that they find the right home. This is new for Austin buyers, because the market has been such a hot seller’s market for so long. These guys are in the market and are ready to move, but they are just waiting for the right place.
We have a lot of buyers in the tech industry, and these buyers are thankfully not losing their jobs. They’re mostly high earners who can work from home, so they aren’t as disrupted by COVID as many people are. A lot are ready and waiting for the right house right now, but many are sitting tight to see how everything shakes out. Those that are waiting will probably jump back in sometime in the summer. All of the tech buyers who were planning to move to Austin have postponed those plans until they’re able to travel.
I saw a flurry of millennial buyers get homes under contract the last or so of March. Those all closed in April and things were a bit clunkier in the closing process. It feels like the closing process is now smoother, as everyone has somewhat found a groove. My new construction buyers were on a bit of a rollercoaster with the flip flop of essential services, but most things are now running well. There has been some concern with appraisals on new builds, but I don’t think that statistical price drops is a huge concern, so we’ll cross that bridge if we have to.
I’m working with a number of out of state buyers who are obviously looking remotely online. Some are considering building because they could get the house they want and know that the house will be in great shape when they close. I’m helping a lot of these buyers tour homes virtually, and we’ve actually gone under contract on two homes using only Facetime to view the homes. That obviously isn’t for everyone, but once travel becomes safer, I plan to ramp up video tours and buyers can then visit Austin after they’re pretty certain they love a home virtually.
The market is really interesting for buyers right now. We were in a really hot seller’s market pre-COVID and that’s obviously loosened up. Prices haven’t really come down, though, and it doesn’t look like they will in any meaningful way. There are deals here and there, but for the most part, sellers are sitting tight to get their price and just waiting out the crisis.