San Antonio

The State of the Market: Cyclical on Hiatus!

Written By: Jenny Nagelmueller – Marketing Director, Legacy Mutual Mortgage

After over 10 years (non-consecutively) in the home building/real estate/financing world, I have come to the conclusion that 2019 gave me a run for my money on being the busiest year in my career… until 2020.

As forecasters have already predicted, the market will continue to stay hot throughout the first quarter of 2020. Since Spring, it has been a steady pace that DID NOT see a fall off during the normal “holiday hiatus” or post-summer fallout, and it has left Realtors, Loan Officers and Finance Industry
professionals grateful, yet exhausted. The continued downward trajectory of mortgage rates has kept the refinance market incredibly heavy and given first-time homebuyers the chance to experience homeownership instead of continuing to dump money into the deep pockets of local landlords. Rents continue to rise and the most desirable locations and dwellings are at capacity, forcing Millennials to look at buying probably sooner thanthey would have looked to even 2-3 years ago.

What does all of this mean in the grand scheme of the economy, an election year and a high migration of people to Texas? Everything. While builders and developers scratch and claw to get the last remaining
pieces of land at “decent” prices in some of Texas’ most desirable cities – Austin, Houston, Dallas, Fort Worth, San Antonio – there just, quite frankly, is not that much land left to buy. Coupled with migrant worker and reliable trades issues and the amount of time permitting is taking to get through most cities, builders are definitely feeling the pain of supply and demand.

As with all other things in the world in general, when demand is high and supply is low, we suffer inflation. For the buyer, this can often mean
that they are at the mercy of the Seller. For entry-level homeowners, this creates “the perfect storm” for them to make more on their house, given the lack of affordable housing in most major cities. Keeping Current Matters noted “In the latest Home Price Insights report, CoreLogic reveals how home prices increased by 4% year-over-year and projects prices will rise 5.2% by December 2020. Dr. Frank Nothaft, Chief Economist at CoreLogic, says: “Moderately priced homes are in high demand and short supply, pushing up values…Homes that sold for 25% or more below the local median price experienced a 5.9% price gain in 2019, compared with a 3.7% gain for homes that sold for 25% or more above the median.” As Dr. Nothaft indicates, the lack of inventory continues to drive home price growth. This means there’s a high demand for homes in this tier of the market, making it a great time to consider using your equity to move up to a bigger or more premium home.

In the world of home loans, this signals a continued “busy season” for most mortgage professionals. From past clients looking to refinance to today’s much lower market rate (or look at cash-out Refi options to ‘upgrade’ their homes) to new home buyers looking to upgrade using the equity in their first home, leads will continue to be plentiful. As rates continue to hover at their lowest numbers in decades, more buyers will continue to surface and the most dutiful Lenders with knowledge and viable experience coupled
with timely responses to a plethora of questions (including explaining what their customers and Realtors see in the news!) will prevail.

Stay strong Realtors and Finance Industry professionals…your “never-ending busy season” is not looking to take a cyclical bell curve anytime soon!