Like many other economic sectors, the real estate industry felt the effects of the pandemic, stay-at-home orders and shifts in consumer activity. However, real estate agents in The Woodlands area said they have been able to carry on with business since March—with some modifications—as interest in local homebuying and selling gradually picked back up in June.“At the beginning, people held off, but now with things starting to loosen up, people are buying homes, asking about it, getting prequalified,” said Brian Schweiker, a real estate agent with RE/MAX The Woodlands & Spring. “Their purchasing power right now is a lot more than what it was just a year ago.”
Market slowdown
Before the first cases of COVID-19 were confirmed in Texas and the Greater Houston area in March, local real estate agents said The Woodlands-area market was poised for a strong year.
Schweiker said local home sales in the first two months of the year were slightly above 2019 levels, a trend he expected to continue through the spring. Kim Vargas, a Realtor with the Houston Properties Team, also said she believed The Woodlands area was poised for a strong 2020.
Once businesses and government entities began responding to the outbreak with extended closures and stay-at-home orders through March and April, Schweiker said many homebuyers and sellers immediately halted their activity. However, those in the midst of buying or selling completed their transactions.
Still, he said the number of homes under contract in The Woodlands area this March dipped around 28% from March 2019 and by more than 24% over March 2018, while that figure for the month of April fell more than 48% since last year and 43% compared to 2018.“March and April were hit pretty significantly in the way of listings, places under contract,” he said.
Vargas said her team also noticed a rapid slowdown in activity on both sides of the sales equation as Realtors were forced to quickly adapt their operations.“When those [statewide gathering and local restaurant] orders came out on March 19, everybody just kind of froze. Buyers were nervous to purchase because they were hoping they could get a good deal. Sellers were nervous to list because they didn’t want people in their houses. [We] had to learn the proper protocols to take to make both of these parties feel comfortable,” she said.
Across the Greater Houston area, overall home sales saw a year-over-year increase in March before an April drop-off, according to the Houston Association of Realtors. Single-family home sales dropped by around 19% from April 2019 to 2020, all property sales fell more than 21%, and the total dollar value of all home sales fell more than 20% year over year.
“We were bracing for a rough report and we got it,” HAR Chair John Nugent said in a statement. “There is definitely no lack of consumer interest in real estate, as property listing views on har.com are up almost 60% from this time last year.”
Economists with the Real Estate Center at Texas A&M University also highlighted the year’s strong start before sharply declining, with February seeing a record high in existing homes sold statewide and the highest number of sales nationwide since 2007.
“A great beginning to the real estate selling season was suddenly awash in disruption,” said James Gaines, the center’s chief economist, in a statement.
Shifting strategies
While the effects of COVID-19 hit the housing market early this spring, industry representatives said they quickly pivoted to change their strategies. Realtors said their business shifted to a remote model that proved popular with many clients and residents.“We are actually doing a lot of virtual tours,” Schweiker said. “We’ve had a number of people from other states make a buying decision based off of a video.”
Bob Kulpinski, vice president of sales and marketing for Taylor Morrison’s Houston division, also said the homebuilder has moved to incorporate new in-person safety protocols and virtual strategies. For those who do not wish to visit homes in person, services including web-based home tours, design selections and live walkthroughs are conducted via video apps. Even home sales have adapted with a curbside closing model for interested buyers, he said.
Schweiker and Vargas also said safety precautions such as increased ventilation throughout homes, sanitization stations, mask-wearing and reduced physical contact are in place to limit health concerns for in-person showings.“With this, everybody has varying degrees of precautions that they’re taking,” Schweiker said. “We trained our agents to see where the comfort factor is with each person, but also then maintain the CDC [Centers for Disease Control and Prevention] guidelines as well.”
Future outlook
Movement toward recovery in the real estate market was expected into summer, as Texas A&M analysts said May represented a trough in the sales slump caused by the pandemic.
“The month of May marked the housing market’s deepest decline thus far during the ongoing COVID-19 pandemic,” Gaines said. “Texas’ existing-home sales plummeted 32% year over year on top of a 22% slide in April.”
And while March and April proved to be tough on the market around The Woodlands, local industry members said a gradual return toward a more positive outlook was tracked through May.
“This pandemic has actually generated some sales,” Schweiker said.
Realtors also noted the experience of extended periods of confinement at home may have helped the building industry as residents look to renovate or add to spaces.
Despite some favorable market conditions for builders and buyers, industry members said a surge in Texas COVID-19 cases from late May through June that prompted a pause on the state’s economic reopening leaves the local market’s outlook unclear through the rest of the year.
“We would love to see growth, but with the second wave coming here and things are starting to be on hold again, we really don’t know,” Vargas said. “I don’t think we’ll get to where 2019 was, but we’re hopeful.”Realtors said factors such as historically low interest rates and the presence of quality new homes in The Woodlands area have also continued to attract buyers. According to the Federal Home Loan Mortgage Corp., or Freddie Mac, the June 25 national weekly average of 3.13% for a 30-year mortgage is the lowest mortgage rates have been since the company began tracking the data in 1971.
Individuals and families are also looking to expand to the suburbs after considering the value of having a larger house and property after months of confinement at home, industry members said.
“People have been in quarantine for two months, three months. They’re realizing that, ‘Look, we might not go back to work. We might have to work from home,” Vargas said. “Right now, the market is really strong between the [$250,000 and $600,000] price point, and it’s because the rates are so low and people are needing more space.”
New construction
One sector of the market that saw success this spring was new construction. Heath Melton, the executive vice president for master-planned communities at the Howard Hughes Corp., said this could be because homebuilders were considered essential workers, and some buyers wanted to visit new, unoccupied homes. New homes under development in The Woodlands are primarily in Creekside Park and East Shore.
“It did slow down during the months of March and April; however, in the month of May most of our homebuilders reported record home sales in a single given month,” Melton said. “A lot of other developers experienced that as well as the market started to open back up.”
Kulpinski also noted a slowdown of Taylor Morrison’s sales in March and April but said May brought a sales rebound due to pent-up buyer demand that is expected to continue into the summer.
Despite decreasing space available for new developments within The Woodlands, Kulpinski also said new homes are better positioned in the real estate market than existing properties this year for several reasons, which could lead to a strong second half of the year for that market. Taylor Morrison and its subsidiary Darling Homes are currently operating in six The Woodlands communities and throughout Harmony in Spring, he said.
“Buyers want to move to less populated areas and are taking advantage of low interest rates. Master-planned communities especially continue to do well because of the increased quality of life,” Kulpinski said. “Since people are spending more time at home, it has caused homebuyers to rethink their living situation. ... New construction can accommodate all of those space needs with plans that are more current.”
Andrew Christman and Dylan Sherman contributed to this report.
