Well, last week would have been the deadline for many of us to file and pay our taxes – but with the extension, we all have until July 15th to finalize that annual tradition! Lots of news and notes to pass along today, so please take a moment to read, listen and enjoy!
Crystal Balls and Predictions
I know that all of us are being asked with increased frequency to do our best impression of Nostradamus and accurately predict the future of the real estate market for our clients. This is always challenging, but no more so, than when worries and concerns dominate the mindset of our clients. So, here is a little bit of historical perspective and future projections based on available data.
Historical First: Housing has usually held up remarkably well, even during economic recessions. The recession from 2007-2001 being the one outlier since 1970. But even with that downturn, where you were made a dramatic difference. It may be snowing in Chicago, but it’s sunny today in Texas!
- During the Great Recession from 2007-2011, here in TX housing prices only declined 4% with the biggest drop occurring from Q1 2009 to Q1 2011 where the average home sale price dropped from $228k to $219k. Contrast that with a National perspective where prices dropped 21% from $322k to $257k from Q1 2007 to Q1 2009.
- Here is a chart showing every recession since 1970 (the shaded gray bars), and as noted, the only period in TX where housing values declined was between 2009 to 2011, and even that decline was only one-fifth the decline experienced at a national level.
Future Looking: There are a few markets in the U.S. that went into the COVID-19 health crisis first and are on the backside now, which are providing glimpses of what the housing market may look like elsewhere as we emerge (the Northeast being the obvious exception).
- Seattle (King, Snohomish and Pierce Counties) was one of the first markets to be impacted by COVID-19 and they are fully on the backside of their curve. As you can see in the below chart, while listing volume is still down for the year, just in the past week, listing volume has increased +20%, +31% and +16% in just the past week!
- Portland is several weeks behind Seattle on the health crisis, so another market to watch closely, but the East Bay in the San Francisco area is also experiencing a similar listing volume jump in the past week of +30%. As noted, NYC and other areas in the Northeast will likely be outliers due to the severity of the outbreak.
- This should be viewed as a positive sign of recovery and a light at the end of the tunnel, that consumer confidence in housing will almost certainly return. This continues to be the time to stay in touch with your sellers and prospective sellers, those that strategically position themselves to capture the buyers’ eyeballs online right now stand to benefit the most when normalized activity resumes!
Additional Loan Support
- Last week Governor Abbott announced a loan program in cooperation with the existing PPP SBA loan program to support TX small businesses. The partnership is in collaboration with Goldman Sachs and Lift Fund. According to the LiftFund website, they are currently accepting “interest” forms as they’ve been overwhelmed with applications, as they open for more applicants, those who have submitted an interest form will be contacted: LiftFunds
- The EID Loan has been significantly shifted since originally being announced by Congress, lowering the emergency $10,000 grant to lower amounts based on the number of employees, which obviously doesn’t necessarily apply to self-employed real estate professionals. NAR is currently working to improve this aspect of the program for independent contractors.
- On the PPP loans, as of Tuesday evening, the SBA reported that over 1.1 Million loan approvals had been made totaling over $268B in loan proceeds which is about 77% of the program’s total $349B. In reality, the existing applications likely consume the remaining amount of the PPP balance. With Congress being in recess until later in May, it could be a period of weeks until additional funding could be provided to the PPP program. As we’ve also noted, many financial institutions focused on existing business customers for loan applications and processing, leaving many small businesses at a disadvantage. Other entities are quickly being onboarded as alternative and unique lenders, such as PayPal – apply here: PayPal PPP Loan Portal
Stay well and stay connected everyone!!
Chris Kelly | President & CEO