The events following the breakout of COVID-19, often called coronavirus, are unprecedented for today’s global citizens. The United States hasn’t seen the spread of a virus that’s so prolific and potentially catastrophic in about 100 years, since the Spanish flu of 1918.
The death toll continues to rise and communities all over the world are sending people into quarantine to minimize the spread and protect the elderly and immunocompromised.
Uncertainty as to how to treat the virus and keep U.S. citizens safe has also escalated, leading to drastic measures. Suddenly, grocery store shelves are empty, small businesses are shutting their doors, restaurants are dramatically limiting business to drive-through and delivery orders, and the world seems to be on pause while we wait for the virus to run its course and a solution to be found.
Alongside the people suffering physically from the virus, people are suffering because they’re losing their jobs and worrying about the economy. Stocks are plummeting, investors are pulling out right and left, and it’s very difficult to see just how our economy will be impacted as a result of these events.
A common question facing investors and economists today is how these events will affect the housing market. Until now, the housing market was flourishing! Many said that it was in a bubble that was getting ready to burst because the economy wouldn’t be able to sustain the prices being asked in regular markets—nobody could have predicted that a burst could come as the result of a widespread virus and not the natural ebb and flow of markets.
It’s important that you take steps to protect yourself and those around you from the virus during the present, but it’s also important to consider the future. When the virus passes and people start coming out of quarantine, what will the Houston housing market look like?
The Dual Threat of COVID-19 and Oil Prices
Right now, the housing market has held moderately stable. February held some of the best sales in history, but it did not, of course, factor in the COVID-19 effects.
“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,” said John Nugent, chairman of the Houston Association of Realtors in a statement.
The oil prices have been concerning investors for some time, especially when events before the spread of COVID-19 occurred. An OPEC deal failed at the beginning of March, causing oil prices to plunge nearly 25 percent.
This decline in oil prices has only grown with the spread of COVID-19, spurring on plummeting oil prices and stocks. It only adds to greater economic uncertainty in the Houston area.
“Both events – coronavirus and OPEC+ falling apart were not expected or priced into the market a month ago,” Rebecca Babin, senior equity trader for CIBC Private Wealth Management, told CNN. “There is still significant uncertainty, but the commodity market is not waiting around to find out if miracles can happen.”
Buyers Regain Power
What does this mean for the housing market? As of the mid-March 2020, nothing changed. Real estate agents didn’t slowe down as buyers with tax returns in hand continued making offers on homes.
In some ways, things will stay the same for the housing market. People still need places to live, and there may be more people than ever moving to look for work after layoffs. The biggest shift, however, will be that buyers will regain control.
For the last several years, the Houston housing market has been dominated by sellers holding most of the power. Buyers had to be very careful in negotiations or they would likely lose out to another buyer waiting in line.
But things are going to be different with the combination of COVID-19, lowering oil prices, and a weakening economy. Suddenly, sellers will be accepting lower-priced offers on real estate, and buyers will be able to make harder negotiations.
Should You Buy Real Estate in Houston Now?
If you’re a stable investor, this could be a great opportunity for you to purchase a home, but it’s not for everyone. Many buyers are losing their jobs all over the U.S., and even if you have plenty of money on reserve from other investments, you shouldn’t try starting a side investment just because you can probably get a deal.
Investors with a steady job that will likely be unaffected by the coronavirus may want to take advantage of the low housing market. The key is to buy investment properties that are going to be worth more in say, 5-10 years when the housing market is most likely to bounce back from the recession that COVID-19 might create.
Rental housing in the low-to-mid range would probably be a good bet. The rent estate market isn’t likely to change much, but you may find fewer buyers interested in the upper-class rentals. You might want to stay away from fix-and-flip properties until you know what the market is doing. You might not be able to get a good return depending on how the economy looks.
The best bet would be to purchase property to rent out that you can sell in 5-10 years after you’ve ideally made your money back on the investment. The housing prices are likely to increase again in about 10 years, and you could make a good profit off of the home you purchased now.
Let Green Residential Guide Your Investments
At Green Residential, we are your premier Houston real estate and property management team. Whether you’re looking to buy, sell, become a landlord, or otherwise invest in properties, we can offer the support, expertise, and know-how to get you through.
We offer unique flat-rate realty and property management fees to help you save money. Our property managers cover things like contract creation, tenant screening, maintenance, landscaping, eviction services, and more.
Our real estate team is the best in the greater Houston area. We can help you find a great deal on a Houston property when you’re ready. For more information about any of the services we offer, contact us today!