We were supposed to be in Barcelona this week, enjoying a city I have always wanted to visit, attending a friend’s wedding, basking in a pre-celebration of our 40-year marriage.
Instead, we went to Boot Ranch in Fredericksburg. I cannot tell you how relaxing it was for one main reason: little or no mention of coronavirus.
Which is why I believe the panic we are experiencing now is going to send more homeowners into the hinterlands, ultimately. Gas is cheap. It’s happening in Austin as home buyers find adjacent communities getting too crowded. It’s happening in Frisco as Prosper and Celina look more attractive. And it’s happening just west of us in Midlothian, despite the occasional bad wind.
We canceled our trip not because we feared getting covid-19, but because we feared getting quarantined abroad. Because of this stupid virus, a relaxing trip turned complicated: pack masks, gloves, Purell, 21-day supplies of meds, constant vigilance. I do not understand the fuss. It’s a bad flu. Granted, it’s one that appears to be super communicable and there is no vaccine. The stock market has cratered: it didn’t crater like this when we had an Ebola patient in residence at Texas Healthcare Resources, right down the street. Ebola is far scarier than Covid-19. Why panic now? Did Covid-19 just give investors an excuse to sell everything?
So how is Covid-19 affecting real estate?
According to Inman News, a woman in the Bay area was stuck in Wuhan during the process of selling her home. Yes, that would be tough.
Fed Cut: How Low Can We Go?
The Fed cut interest rates this week so low mortgages are almost free. And while Chinese buyers were still the single largest group of foreign homebuyers in the U.S., Chinese buyers account for only about 3 percent of North Texas buyers.
“The fundamentals of the U.S. economy remain strong,” the U.S. Federal Reserve’s open market committee said in a statement. “However, the coronavirus poses evolving risks to economic activity.”
InmanTravel and hotel stocks are so painfully low I cannot bear to look. Conferences are being postponed, including the National Association of Realtors’s (NAR) two upcoming California conferences in San Diego and LA: canceled in response to concerns about covid-19. We just entered NAREE’s journalism contest: will our June conference in Miami be canceled, too?
Real estate companies’ stock is tanking, even Zillow’s:
“Real estate stocks are among those that have suffered in day-after-day declines. Realogy’s stock price has fallen from more than $13 per share last week to $8.35 on Thursday. Zillow is down from more than $65 nearly two weeks ago to just under $52 per share Thursday. And RE/MAX is down from $40.57 on Feb. 20 to just above $30 per share Thursday.”
Almost everyone’s stock is tanking, except for Clorox and Kimberly-Clark. This does not bode well for young, growing real estate companies. Are people really so paranoid about getting sick they will stop looking at homes? Are people actually canceling showings?
First of all, you can practically see a home these days without encountering another human being, thanks to technology. There is a whole lot you can do from home: scout listings, order food, and supplies, have them dropped by your front door, never encounter the delivery man.
So why is everyone freaking out?
Uncertainty.
Uncertainty is the reason we canceled our trip. Uncertainty is why buyers back out of contracts, stay home, and hoard toilet paper. Earlier this week I tweeted my friend George Ratiu, senior economist with realtor.com, where he delivers information and insights to consumers and Realtors. Could Corona-crazy drive folks to the bunkers, to smaller and smaller cities where they will purchase idyllic vacation homes that might become permanent homes? This is what happened post 9/11, when we had a major terrorist attack followed by the Anthrax murders, remember? Still gives me shudders:
Fear of long-term commitment to the unknown. We will see, said George, a flurry of refinancing, but helpful only if you plan to stay in the house long enough to recoup the expenses.
We have something else unusual going on in North Dallas/Preston Hollow: a dearth of housing as tornado victims are now buying homes to live in while their homesteads are being rebuilt or torn down. Rather than bicker with insurance companies, many owners of damaged homes are looking to buy or are buying temporary homes they can use as rentals later. This will eat up inventory further.
Finally, one of the highlights of my trip to Fredericksburg was learning of another bubbling Tiny Home movement, this one for workers. Upscale enough to be attractive, cheap enough to be affordable.
Stay tuned, and wash your hands for at least 20 minutes.
