There’s a whole lot of talk about Coronavirus right here in Texas — quarantines, canceled events, flight delays, suggestions to wash your hands, debates over whether to wear a mask covering one’s mouth in public — but there’s been little discussion about potential long-term effects to Dallas’ real estate market.
“For long-term investors, this jolt is a bump in the road that will eventually only be a memory,” said Mark Hamrick, senior economic analyst for Bankrate. “As with the outbreak, we cannot be confident of the depth or duration of the market’s decline or the economic impacts in the short-term. But also similar to the spread of the virus, we know that it will have a conclusion. It will take some time to arrive at that point.”
A Silver Lining?
Realtor Leanna Moss Bowles with the Moss Team at Diversified Realty Consultants said she’s heard some chatter around DFW but does not have a major concern about the virus creating a downtrend.
“A few have reported buyers heavily invested in the stock market feeling hesitation to move forward with purchases until the market stabilizes,” Bowles said. “If they were planning to cash out a stock portfolio to fund a real estate transaction, they may be temporarily pumping the brakes.”
There is a silver lining, though.
“Mortgage rates have dipped corresponding to stock fall,” Bowles added. “This is an incentive for buyers to stay in the game. [These are the] lowest mortgage rates in 40 years.”
The Realtor explained that she also has not heard anything about limiting business-related travel or potential relocations due to Coronavirus.
As the Coronavirus death toll climbs to about 3,000, we’re reminded that the epidemic is seeing its largest impact on restaurants, retail, and real estate in China, where it originated.
According to the 2010 Census, persons of Asian descent make up about 3 percent of the Dallas population, while 50 percent is white and 25 percent is black. Several Dallas-area regular events, such as a weekly Bible Study Fellowship group in Plano where classes are held in Mandarin, encouraged participants to take a couple of weeks off from gathering with the group if they had traveled to China recently.
On a much larger scale, several of the world’s most prominent real estate companies pulled out of the MIPIM conference in Cannes, France, because of concerns about exposure to Coronavirus. The conference subsequently was rescheduled to June.
Realtor Beni Aguirre, who has extensive financial services background and works in the Austin market, said clients are concerned about a possible global recession.
“Builders and developers have voiced concerns on having too much money tied up in projects during this epidemic,” said Aguirre, who works with The Listing Firm. “This has caused some to slow down on purchasing until we have a clearer picture of the market’s outcome.”
There are potential impacts for first-time homebuyers who don’t know if they’re paying too much now, and for homestead sellers who are feeling rushed to sell at a perceived higher price rather than risk an economic downturn that might affect their net gains at closing, he explained.
“People need places to live and we simply don’t have enough properties in Austin,” Aguirre added. “Many buyers are out making competitive offers to secure the home they desire or need. For many first-time or one-property purchasers, the prevailing thought is if they stay in their homes long enough, they can wait out the possible impending global recession.”
Realtor Melissa Redfearn, an agent with Walsh & Mangan Real Estate Group in College Station, said she’s noticed “very little impact on our local housing market until recently.”
“I have a colleague who had a buyer terminate their contract on a house due to the stock market drastically dropping last week,” Redfearn said. “I’m sure the volatility of the stock market has made some buyers a little uneasy. If the stock market stays unpredictable, I think we will definitely see the market slowing down.”
Change Of Plans
Air travel has already taken a hit, and large public gatherings quickly followed suit.
A petition is circulating in the Austin area to cancel South by Southwest music festival, a major contributor to the economy there. A popular energy conference in Houston was canceled last week, and rumors are circulating that the 2020 Olympic Games in Tokyo could be impacted. It’s only a matter of time before the Dallas social calendar gets some rainchecks as well.
As usual in times of economic uncertainty, there’s much that is unknown, whether your name is Warren Buffett or Jimmy Buffett.
“As with stock market declines over the past several decades including the financial crisis and Great Recession, the biggest challenge for those inclined to dump stocks is determining when to get back into the market,” said Hamrick, the analyst with Bankrate. “History tells us that most mere mortals aren’t able to get that timing right, which risks exacerbating losses. Long-term investors with the ability and fortitude to remain in the market should do just that. This is for certain: One locks in a loss by selling.”