How will Dallas Fort Worth housing market recover from coronavirus-related crisis
The last month or so, we are all witnessing the rapid spread of coronavirus throughout the world. The global pandemic seems to be loosening its grip, and now all eyes are turning towards the economy. Virtually all sectors have been thrown into uncertainty, and the real estate market is no exception. Of course, how the market is going to perform largely depends on the region in question. But what about one of the hottest in the country? Dallas Fort Worth housing market is known for being resilient, so how will it handle this risk of fallout? Read on for a detailed analysis!
An imminent slowdown, but not for long
Before the appearance of the coronavirus, all conditions were set for a competitive Dallas Fort Worth housing market. In fact, in most regions, this is the time when most contracts are signed. Up until February, the sales of Texas homes were climbing for the eighth month in a row. However, we can throw all the 2020 predictions out of the window not that the virus has arrived. Just looking at the home showings at the end of March, we can notice the sales have plummeted 55 percent compared to the previous month and the whole of 2019.
The good news, however, is that the Dallas Fort Worth housing market is not among real estate markets most affected by coronavirus. This essentially means that, while it is currently in a downfall, it will weather the storm. There is still concern that, as more people lose their jobs, fewer of them will be able to afford houses. So, yes, this spring selling season is bound to have fewer shoppers and even fewer options on the table. But the long-term prospects shouldn’t be as grave as many fear they will be.
Impact on real estate supply and demand
Are you weighing on whether you should sell your vacation house this year? Then you should know that the hunt is still on. Yes, the quarantine might leave the impression that the real estate business has been brought to a halt. Instead, they just shifted to online platforms. DFW buyers have switched over to video tours and other online tools as the in-person showings are off the table. Still, a March survey shows that 35 percent of potential buyers have stopped actively searching for a home. But, the fact that many people will be forced to move house and downsize because of financial burdens is not going anywhere.
This potentially leaves us with a surge in activity starting from July, as there might be a race trying to get buyers under a contract by the end of the year. For now, until the sellers who’ve pulled their homes off the market and the buyers don’t resurface, all we can do is wait.
The mortgage market – buyer’s main concern
So we’ve mentioned that local movers will have a lot of work to do, but a lot will stand in the way of potential buyers. With job losses and stock market crash, interest rate cuts are possible as well. This might lead the investors to sell their stocks and buy bonds instead, which means the price of bonds will be higher. The higher their price, the lower yield, or the interest payment. In turn, this will lower the mortgage rates as well. Still, if we look at the NYT report, we can already conclude that the interest rates were already low before the outbreak. With this in mind, there won’t be as drastic a change in Dallas Fort Worth housing market as some might fear. Right now, rates are down to around 3.8 percent. The number is not fluctuating, so it’s rather steady, meaning the lenders probably won’t go any lower.
All things considered, locking in a mortgage rate is quite risky right now. On the other hand, the good news is that it’s not about the depth of the crisis as much as its duration. Once we weather the storm, the second quarter might not be as bad.
The impact on house building supply
But supply and demand isn’t the only aspect of the Dallas Forth Worth housing market. Building and renovating are also a huge part of it, and they rely on building materials. Yet, here’s the rub – almost one-third of all materials are normally imported from China. To put it simply, real estate development is an international affair, and so certain materials from Italy and Spain are now scarce too. As there’s a difficulty in getting mortgages, land acquisition and development spending are about to drop for a while. Depending on how the lenders react to the uncertainty, some projects might even be halted mid-construction. Keep in mind that the impact is not yet here, but it will come. The good news? It’s probably going to be short-lived. But, for the time being, even governments are stopping projects.
When it comes to apartment construction, Class ‘B’ or Class ‘C’ properties might be more popularized. This is to be expected, as job losses and lost income will become an issue. If you’re planning on relocating any time soon, then look up a reliable company like Evolution Moving Company Dallas – Fort Worth. Now more than ever it’s important to rely on a trustworthy mover to handle your belongings in these harsh times.
What lies ahead?
The current situation of the Dallas Fort Worth housing market is constantly changing, as with every region’s market. And while now may not be the right time for buying your first rental property, that doesn’t mean you shouldn’t keep an eye on future prospects. Of course, predictions have always been helpful in times of crisis, so what can we expect once the virus subsides? The ones to take the blow will be the supply chains, and they will probably take longest to come back to normal. Still, the optimistic scenarios say that the crisis will be far from a 2008 market crash. Yes, there’s a sharp drop, but the return might be just as strong. After all, the quarantine has prevented people from renovating or buying even if they had the intention. All in all, right now all we can do is wait for the storm to pass and deal with the consequences.