Houston-area home sales experienced another double-digit gain in February as buyers came out in droves to take advantage of low mortgage rates. But with the local economy in peril amid plunging oil prices and disruption from the coronavirus, sellers are starting to worry the busy market won't last.
Real estate agent Jessie Singh said the owner of one of her listings in Rice Military instructed her to accept an offer he had declined before the oil and stock markets plummeted on Monday.
"He literally sent me a text that said: 'Accept this offer,'" said Singh of JSingh Homes.
Uncertainty may bring an end to the roll the Houston housing market has been on over the last few months. In February, buyers closed on 6,044 single-family homes, a 13.2% jump over February 2019, new data from the Houston Association of Realtors show. The median price of those sales was $245,000, up 5.2% from a year earlier.
Economic turmoil, however, has cast a pall over the market.
The effect on housing of the coronavirus pandemic is not likely to be reflected until the second quarter, according to a report from the Real Estate Center at Texas A&M University.
"There may be disruptions to building-material supply chains and the visiting and showing of homes for sale, threatening the Texas housing market," the report read.
Sellers are likely to be more accepting of offers they wouldn't have previously entertained.
"The uncertainty is scaring people," Singh said.
Economist Ted C. Jones said he expected there to be little impact on Houston real estate exclusively due to the coronavirus.
To understand the possible affects, Jones, chief economist for Stewart Title, examined three past events: Severe Acute Respiratory Syndrome, the swine flu and the 9/11 terrorist attacks. He noted the aftermath of 9/11 coincided with SARS and the swine flu coincided with the Great Recession.
The past events, he said in an analysis, "probably magnified or extended the trends of the time, but the total changes from the prior and the following year could not solely be attributed to the event."
If there is a positive note, it is in the decline in residential mortgage rates, which continues to fuel a refinancing wave.
The average 30-year fixed-rate mortgage hit a record 3.29% last week, the lowest level in its nearly 50-year history, but bounced back up to 3.36% this week, according to Freddie Mac. Mortgage applications increased 10% last week from a year ago.
"Coronavirus was not a factor in the February housing data, but obviously with the losses that Wall Street has suffered as well as declining oil prices, we are keeping a watchful eye on housing market activity," John Nugent, HAR's chairman, said in a monthly report released Wednesday.
Jacqueline Altobelli, who is under contract on a house in Oak Forest, isn't letting the coronavirus or the market derail her housing plans.
She and her husband have a one-year-old son and they want to renovate and add onto their current two-bedroom bungalow in the Heights. Instead of renting while the renovations take place, the couple decided to buy another home, which they'll rent out when their Heights house is ready.
To avoid getting into a bidding war, which have been commonplace in neighborhoods like the Heights and Montrose, they focused on properties that had been on the market awhile.
The house they found in Oak Forest had been for sale for five months. The seller dropped the price and the couple was able to negotiate it a bit lower.
Altobelli said she sees the neighborhood as a good long-term investment.
"Everything is going north and west because everyone who can't afford the Heights is looking there," she said.
Single-family homes priced between $250,000 and $500,000 saw the strongest sales in February, followed by properties priced at or above $750,000, according to the data, which includes sales handled through the Multiple Listing Service throughout primarily Harris, Fort Bend and Montgomery counties.
Inventory didn't budge from January levels, with just 3.5 months of supply available for sale. Experts consider 6 months a balanced market where neither buyer nor seller have the upper hand in negotiations.