Luis Torres, an economist with the Texas A&M Real Estate Center, said that the housing sector can be a barometer for the economy as a whole because it affects jobs of laborers, builders, realtors and a litany of other professions. Chinese buyers have been spending less on U.S. real estate as their government has tightened rules on how much money can leave the country, U.S. immigration rules have tightened, and trade talks between the two nations have heated up. The deadly outbreak of the coronavirus from China, which has sickened thousands around the world and terrified millions more, is taking a toll on global financial markets as well—and the effects are likely to extend to the U.S. luxury real estate market. Home Buyers Reveal: 'What I Wish I Had Known Before Buying My First Home', Selling Your Home? Buyers from China spent about $13.4 billion on U.S. homes from April 2018 through May 2019, according to the NAR's most recent data on foreign buyers. And when bonds are strong, mortgage rates fall. "In the short term, the virus could dampen [luxury] sales further.". By Clare Trapasso | Feb 6, 2020. For regions whose residents rely largely on the energy industry for work, like Houston or the Permian Basin, or on cross-border trade, like the Rio Grande Valley, home values and sales may dip more than in other Texas regions. Try Living in One of These Homes, 5 Delightful Living Room Looks That'll Make You Want To Stay on the Sofa Until 2021, The Duke Was Here: SoCal Ranch Once Owned by John Wayne Available for $8M, How To Stay Warm While Working From Home This Winter—Without Spending a Fortune on Heating, Have You Served? "We're uncertain about everything, and this is just another item to fret about.". In the meantime, the Department of Housing and Urban Development suspended foreclosures and evictions for mortgages insured by the Federal Housing Administration until the end of April. Do you value our journalism? At a time when newsroom resources and revenue across the country are declining, The Texas Tribune remains committed to sustaining our mission: creating a more engaged and informed Texas with every story we cover, every event we convene and every newsletter we send. Kong is a real estate broker at Realty World Advance Group in San Bruno, CA, and the president-elect of the Asian Real Estate Association of America. Perhaps it goes without saying — but producing quality journalism isn't cheap. Real estate’s clobbering runs wide and deep. But, at the same time, home prices increased 3.6%. “And it has a multiplier effect into the rest of the economy, from moving companies to furniture stores," Torres said. Getty. The only thing in recent memory to compare it with is the outbreak of severe acute respiratory syndrome, or SARS, in late 2002 and early 2003. But once the virus is under control, the real estate market will likely go back to normal, more or less. But, at the same time, home prices increased 3.6%. It may seem perplexing that a virus that originated in China (and where most of its nearly 500 fatalities occurred) could result in lower mortgage interest rates an ocean away. "You have less incentive to buy real estate if it's unclear if and when you'll get to visit the property," says Chief Economist Danielle Hale of realtor.com®. “Housing markets will be hit differently depending on the region. This site is protected by reCAPTCHA and the, Sorry, we were unable to share this article. “That’s when you can have falling prices,” Torres said. Then the virus hit. Another area that might see an economic downturn is the border because of a slowdown in commercial trade with Mexico. Austin has one of the strongest office markets in the country, but it isn't immune to a downturn as companies are faced with the unprecedented COVID-19 pandemic. So what happens there affects businesses around the world, which then affects global financial markets. Chinese buyers may flock to the U.S. again for the same reasons. And Texas' homebuilding industry has been solid, too; no other state had more building permits in 2019, according to census data. She also taught journalism courses at several New York City colleges and obtained a real estate license. "China has been the most important source of foreign demand for real estate," says Lawrence Yun, chief economist at the National Association of Realtors®. Thank globalization. Since the coronavirus outbreak, luxury broker Lenz is seeing them become even more motivated to acquire a U.S. property. How is the Coronavirus affecting the Austin Real Estate Market? For the best experience, please enable cookies when using our site. Contact her at email@example.com. Comptroller Glenn Hegar said last month that the state's unemployment rate could be headed for double digits, which could exceed the historic high of 1986's 9.2% unemployment rate. "We don't know what's going to happen.". Statewide home sales data for March is not available yet, but researchers say prices should be stable, at least in the first months of the crisis. Get quick and easy access to your home value, neighborhood activity and financial possibilites. “[Chinese] people who are wealthy may feel tired of the perception of China as being a third-world country," says NAR's Yun. Statewide, physical home showings are down between 38% and 44%, according to Texas Realtors Chairman Cindi Bulla. "That was shocking to me.". "The buyers can’t be here physically to sign. by Juan Pablo Garnham And those areas may take longer to recover, too. How is the Coronavirus affecting the Austin Real Estate Market? Fannie Mae and Freddie Mac, the two government-sponsored institutions that back mortgages, are doing the same for at least two months. “Mortgage debt will continue to exist and is not going away,” said Torres. "People locally, I can't see them changing their plans one way or another unless it gets much worse.". While the outbreak may make it more difficult for Chinese buyers to pick up U.S. properties for now, it could be a boon for the luxury market in the long term. There could also be a downside to lower rates—while they will likely spur more buyers to get into the market at a time when buyer activity is already ramping up, sellers may respond by boosting their list prices. "I don’t think it will have any impact unless it turns into a worldwide disaster," he says. To learn more, Watch \"Monday Night LIVE with Susanna\"for Tips and Tricks and everything surrounding your real estate buying, selling or investment decisions.
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