There is no shortage of news about the spread of COVID-19 (also known as coronavirus). In just a few short weeks COVID-19 has emerged as a significant global disruptor with a growing public health impact in America: schools and child care centers are limiting attendance; businesses are instructing employees to work from home; community events are being cancelled; and health care systems are showing strain. Here in Houston, you know we are taking the risk of community spread seriously to have cancelled the Houston Livestock Show & Rodeo, which will cost us substantially in lost wages and sales tax revenue.
First, here's what Boulevard Realty is doing:
- Our office will remain open for normal business hours and operations. Our goal is to maintain business as usual to the safest extent possible. We will still answer the phone, show homes, and have small events.
- However, we want to honor and protect the safety and wellbeing of our agents and staff. Anyone who wishes to self-quarantine or otherwise limit exposure during this time will be offered accommodations. If anyone falls ill or shows symptoms, they will stay at home and we will support their quarantine fully.
- We are taking necessary precautions around the office by stocking up on disinfectant and sanitization supplies. We encourage all to take great care with handwashing and other germ prevention.
- We are stressing the importance of promoting and supporting our local businesses, who are especially vulnerable to drops in sales, which affects the livelihood of our neighbors and the economic health of our communities.
- We are following the best advice of our local officials about avoiding large gatherings of hundreds of people or more, but are continuing to meet in person for all who are comfortable. We are also following the advice of public health authorities about social distancing, limiting exposure to vulnerable persons, and not overburdening our health care system.
Now, let's talk about what effect this may have on Houston real estate.
It always bears repeating that:
- All real estate is local.
- Our housing market is intrinsically tied to job security.
- The stock market is not the economy.
There will certainly be a short-, medium-, and long-term effect of COVID-19 on real estate.
- Short-Term: Any sense of uncertainty does create a pause and some hesitation in the market. Right now the economic indicator having the greatest local impact on home buyers and sellers is the price of oil. We have weathered this sort of volatility before, as recently as early 2015 when the price per barrel dropped from over $100 to about $30 overnight. While our economy is increasingly diverse, many of our jobs and portfolios are still tied to energy, and so the fact that we are seeing some buyers get cold feet all of a sudden is understandable. For sellers, we would expect showings to slow down but will likely see an increase in digital lookie-loos, which isn't a bad thing.
- Medium-Term: Perhaps the greatest and most uncertain lingering effect into the spring will have to do with the sudden slowdown in retail and consumer spending, particularly on local businesses. An unfortunate aftershock could be the closing of businesses that depend on steady sales figures, or at the very least layoffs. Meanwhile, supply chain disruption will have a broader impact on the price of consumer goods, making it difficult to know just what to do with our pocketbooks in the months ahead. There is no way to know how this will play out directly when it comes to home sales, the largest purchase consumers make, but there will certainly be a period of adjustment.
- Long-Term: As part of national economic stimulus efforts, already historically low interest rates have been lowered even more. While it's easy to cut rates, raising them usually takes longer. Once the pandemic is contained, home buyers returning to or entering the market may be enticed by the even lower rates than they saw going into 2020. The sudden shock to the broader economy may see some impact on pricing. This could go one of two ways. It only takes one major disruption to slow down the rate of construction, which places strain on our existing housing stock and raises prices on the resale market. At the high end of the market, buyers may be a little more conservative and so luxury prices and home sales may take a hit.
What is our advice?
It would be insensitive to say that there is no cause for concern. Generally, however, we tend to think that the markets are what we make of them. In other words, try to avoid panic. This too shall pass. Of course, we should follow the best advice of our elected and public health officials when it comes to mitigating risk. In the meantime, one of the best things we can do to bolster our hyperlocal economies is to ensure that our neighborhood businesses, restaurants, and service providers don't bear a disproportionate impact of what is ultimately a momentary disruptor by continuing to shop and support local.
If you are selling, keep your home ready to show. If you are buying, keep looking.
As always, we're all just a call, text, or email away.