Uri Man Exec VP of Land Tejas & President of Lagoon Development on impact of Corona Virus on Housing

Описание: Uri Man Exec VP of Land Tejas & President of Lagoon Development on impact of Corona Virus on Housing

Information From Past Pandemics, And What We Can Learn
1. Zillow conducted a study on housing during previous pandemics and concluded that while home sales dropped dramatically during the pandemic, home prices stayed about the same or suffered a slight decrease. This makes intuitive sense because it’s harder for prices to change when there are few transactions.
2. In short, previous pandemics have simply put the housing market on pause.
3. Furthermore, the federal government has announced a moratorium on foreclosures on any mortgage backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration (FHA) that will last at least through April.
In 2003, during SARS, Hong Kong house prices did not fall significantly, but transaction volumes fell by 33-72% as customers avoided human contact (“avoidance behavior” like avoiding travel, restaurants, and public gatherings). After the epidemic was over, transactions snapped back to normal volumes. https://www.zillow.com/research/pande...
4. Statistically insignificant 1.9% fall in home prices
5. This pattern differs from a standard recession, which is a situation in which economic activity falls for 6-18 months and then recovers more slowly.

What Forces are Impacting the Housing Market
1. Lower Interest Rates (POSITIVE impact on Home Prices)
2. Consumer Confidences is falling –Impact on Housing Purchases (possible NEGATIVE impact on Home Prices)
3. Social Distancing / Avoiding Human Contact – Buyers putting decisions on Hold (possible NEGATIVE impact on Home Prices)
4. Higher Unemployment (possible NEGATIVE impact on Home Prices)
Nationwide limited supply of available Housing – Virtually every city in America saw lower transactions in Jan 2020 compared to Jan 2019 because of the limited supply of housing – Tight housing Market (POSITIVE impact on Home Prices)
5. Social Distancing / Avoiding Human Contact – Sellers taking homes off the market as they do not want people inside their homes (lowers supply – possible POSITIVE impact on Home Prices)

To the Extent Residential Real Estate Prices are affected, which segments will be most effected
1. $500,000 and up will be more effected than $200,000 to $500,000 because wealthier people tend to have lost more money in the stock market
2. The over $500,000 price range is more likely to see some cancelled sales
Cities where significant population are employed in the financial sector (think NYC, San Francisco, Chicago) will see significantly lower purchasing power as wealth is eroded

Could the future recession be as bad as 2008, or even worse?
1. Even in full-blown recessions, the housing market is incredibly durable. In some previous recessions home prices have actually gone up.
2. Typically the housing market isn’t tied to swings in the stock market, because people don’t buy houses purely as an investment.
3. Housing is a basic need, and the decision to buy one is usually prompted by entering a new stage of life.
4. It is unlikely a recession now would have the same impact on the housing market as the last recession did.
5. Why? because the factors that triggered that downturn do not exist in today’s environment – such as the relaxed lending standards
6. Years of tighter credit standards have reduced the risk of widespread foreclosures like we experienced a decade ago. With fewer listings in what’s already a housing shortage environment, home prices are likely to hold steady
7. Furthermore, the federal government has announced a moratorium on foreclosures on any mortgage backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration (FHA) that will last at least through April.
This is an important measure that will keep the bottom from falling out of the housing market because of rapidly rising foreclosures, like it did in 2008.

What about Houston specifically
1. Economy has diversified and strengthened over the past two decades and is in a strong position to withstand economic downturns that have greater impact nationally
2. Texas, like Florida, has benefited from the recent change in the national tax code which will keep people coming to Texas for years to come
3. Houston economy specifically is one of the biggest beneficiaries from the recent US/Canada Mexico Trade deal.

What are builders doing to help buyers take advantage of the low interest environment
1. Virtual Tours of Homes from your desktop
2. Scheduling Individual Appointments to tour models – instead of the general public walking in
3. Appointments to tour models, unaccompanied – so families can be alone and uninterrupted with a model home