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The economy is tanking. So why aren’t home prices dropping?

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From our weekly update the Brokerage supplies- New Listings, overall, are still down about 20% over last year. In a recent NAR Flash Survey, more than 3 in 4 potential sellers (77%) said they were preparing to sell their homes following the end of the stay-at-home orders in their states. 

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Limited market actually helps current sellers...there ARE still plenty of people who have funds and can qualify for a mortgage.  I'm actually seeing situations locally with some homes selling for MORE than listing.  Not bidding war crazy like we had in the mid-2000's in Austin with the rush of Californians looking for 'cheap' housing (ie. a REAL house with a REAL yard listed for under $700K) who would bid properties up to more than $75-100K over the ask, but still a good 10-15% over ask.  

 

A quick search of HAR showed that many of the homes near mom that had been on the market for a while have quickly gone under contract within the last month, including one foreclosure that surprisingly sat on the market for more than four months with the current agent (prior listing was pulled).  I had considered making an offer when the listing price dropped under $300K but it was STILL going to be less than the ask...guess I won't do that now.  

 

There are also some people looking to move into the better school districts while things are shut down.  I am also of the opinion that some were moving specifically to get OUT of the City of Houston given the mismanagement that has occurred under the 'leadership' of the current mayor.  They would still be subject to Harris County taxes, but NOT the taxes imposed by the City of Houston.     

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Limited supply and strong demand leads the way. Alot of people have the cash and are just waiting for the right house in the right location. Don't forget overseas buyers from Asia who have nearly unlimited cash it seems, they too, are waiting for the right opportunity. With so much cash sitting on the sidelines, no wonder home prices are stable, if not getting even more expensive. Location, Location, Location......If your a seller in these markets, you hold all the cards. Too bad for buyers, the sellers are in no rush.

 

 

 

 

Edited by NorCalR1

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