“Rebound” is a term used in sports to describe the ball becoming available for possession by either opponent after an attempt to put the ball or puck into the goal has been unsuccessful.
But in the last few months, this word has been haunting the four corners of the United States in search of an area where it could thrive once more. All industries particularly the real estate business, need to rebound from the nightmares of the recent pandemic. After months of playing defense, it’s high time for the industry to play offense and strike back.
As mortgage applications, price appreciation, and slowly growing new listings indicate that the national real estate industry is finally mending from the coronavirus, some housing markets are charting faster and stronger recoveries than others.
The reasons why some cities are bouncing back quicker boil down to robust local economies, less severe coronavirus-prompted lockdowns, and, in some cases, low numbers of COVID-19 infections.
Real Estate IQ, being your go-to authority in real estate investing, focuses on the story of coping up and recovery of major cities in Texas and some hotspot areas in the US. In this blog, we will try to take a look at what is in store for the real estate industry in the days to come.
Fast Recovery due to healthy Job Market
The significant difference has been the journey to recovery. Some places have had a sharper rebound. There are also a few markets that weren’t hit as hard initially. Most metros that sustained only a light Covid-19 blow predominantly dot the Midwest, where the virus has not spread as rapidly or as overwhelmingly as it has in the East.
Some of the cities where new listings and pending home sales avoided the countrywide downward shift in March and April include Des Moines, Iowa, Spokane, Washington, and Indianapolis, Indiana. Markets that are more rural and didn’t lockdown are faring better in terms of housing activity. There were no state shelter-in-place orders in several states like Nebraska, Iowa, South Dakota, and North Dakota. That definitely played a role in real estate not taking as great a dive.
A large coronavirus outbreak does not necessarily spell out a depressed housing market – at least, not for long.
Seattle, for instance, was the U.S. first viral hot spot in March but its real estate investing industry has rebounded since. According to a report by real estate brokerage Compass, the number of homes under contract in the Emerald City bottomed out in early April, having slipped nearly 50% from their pre-COVID levels. In Seattle, the market has almost fully recovered in terms of the number of homes hitting the market which could be attributed to having a tech workforce, which has done excellently well as far as the economy is concerned. .
Austin & Houston bring the A-Game together
The housing market in Austin, Texas, is quickly rebounding from the effects of the coronavirus. The technology sector seems to have propped Austin’s real estate as well. This city in Texas, nicknamed Silicon Hill for its concentration of tech companies, is home to Dell alongside outposts of Amazon, Google, and Apple, among others. Firms here have attracted workers – and, thus, home buyers and renters – from around the country for years. Austin has always been known with the reputation to defy trends, even in the Great Recession 10 years ago. It’s a very resilient city and it has mostly to do with the fact that there’s just an abundance of work. According to realtor.com’s new weekly report, 8 U.S. cities with robust tech sectors have seen more than a full rebound.
Reports show that Austin’s for-sale inventory dropped some 35% in April thus creating a demand-hype even if relocations, which typically fuel the local real estate segment, slowed down due to the pandemic.
Austin is also one of the four U.S. cities John Burns Real Estate Consulting (JBREC) has identified as “boom markets” due to their amazing recovery record. The others are Tampa, Florida, Salt Lake City, Utah, and Phoenix, Arizona.
The four cities were picked primarily due to their employment makeup. Every market is being affected by [the coronavirus-induced slowdown in] retail and hospitality to some extent. These markets that were picked don’t have a large share of jobs in leisure and hospitality.
Houston’s housing segment appears to have remained strong despite the double whammy of a health crisis and a disarrayed oil industry, which briefly experienced negative prices for the first time in April. It has done quite impressively and is more resilient than it was originally credited for. Houston has been a great market. Builders have been really pleased with their sales and they’re seeing a lot of demand there.
According to Compass, by early May, the number of listings under contract in Houston has grown nearly 80% since contracting 27% a month earlier. As of May 5, contracts were also 52% higher than they were pre-COVID.
As a whole, Texas has a few local housing markets that have bounced back in terms of both supply and demand. Texas overall seems to have come back to pre-COVID levels, both on the buy-side and the listing side. The strongest performing cities have been Houston and Austin.
The most remarkable Covid-19 rebound tale, though, might belong to the nation’s capital. According to Compass, Washington, D.C. metro area has experienced “the most impressive” housing market revival. There, home sale contracts have climbed 150% after hitting a Covid-19 trough that stood 49% lower than pre-pandemic levels. What is even more noteworthy is that contracts in D.C. have now doubled compared to their pre-coronavirus tally.
As if gifted with an economic firewall, DC has historically been insulated through a variety of factors. Not only has it housed the job base federal, a diplomatic corps, the International Monetary Fund, the World Bank, and the National Institutes of Health. Many solid job industries aren’t necessarily impacted by what’s been happening severely and immediately.
After all, a nation or even just an industry’s character and stamina are best tested with adversaries that will have us caught off guard. It is at this moment that we learn to be together and become a community, caring for each other.
In the second part of this blog, we will see how the real estate industry will fare against its biggest challenge so far and how it will adapt to the call of the new normal times.
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.
Sources : https://www.realtor.com/