The COVID-19 crisis has and is affecting the Austin real estate market, but it varies considerably at the sub-market level. For example, a median priced home near the Domain will fair differently than a luxury home in Westlake. 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.
Lagging Market Indicators
The most definitive indicators for market performance are year-over-year comparisons of the number of homes that have gone pending, the number of closings, & median/average price comparisons. However, these are lagging indicators. Sales were under contract 30-45 days before any reports and buyers started shopping 1-6 months before they put a property under contract.
In general, the real estate market is a slow-moving ship. Prices generally follow overall economic conditions after months (or even years) of those conditions. For example, the median price in the Austin market bottomed out in 2010, which was one year after the recession ended. It returned to its 2007 level in late 2011, two years after the recession ended.
Leading Market Indicators
In general, real estate demand follows consumer demand. When consumers are confident & buying, they are generally also buying real estate. As such, the Consumer Confidence Index & the University of Michigan’s Consumer Sentiment research are both leading indicators of the US economy. In general, these follow the national news cycle. When there is a lot of good news, confidence goes up, and vice versa.
We measure and track the local Austin market performance, which are lagging indicators. When there are more homes under contract & sold, and when prices go up, we know that we’ve already performed better. This is helpful to monitor, but it’s better to know earlier than this. Likewise, national leading indicators report only once per month and don’t measure consumer sentiment at the local level. However, there are local indicators that we track in order to determine when the market begins to improve:
- Consultation & Showing Inquiries: We measure the year over year volume of inbound inquiries to view properties and/or speak with agents about purchases or sales. When these begin trending up, we will know that the market is improving.
- Web Traffic: We have a highly trafficked website with years of data. When site traffic declines (year over year) we know the market is slowing and when it begins to trend upwards, we know that it’s improving. We analyze our web traffic overall, as well as organic & paid traffic, in order to identify trends.
- New Purchase Applications: When buyers begin to shop for properties, they apply for loans. When there is more buyer activity, more buyers apply for loans, and vice versa. We stay in close contact with our preferred lenders to monitor this activity.
What’s Happening Now?
The COVID-19 Crisis was extremely fast moving and impactful. Consumer Confidence/Sentiment took a sharp decline in March, and an even sharper decline in April. All hyper-local measurements took a steep decline. While lagging indicators are slow to report, we just received March numbers, which were impacted by the crisis, and we are currently reviewing those numbers. We believe that markets react negatively to uncertainty, so we predict that leading indicators & hyper-local measurements will begin to improve as we see plans to begin to lift the shelter-in-place orders. As more certain plans emerge, and are implemented, we expect indicators to continue to improve.