If the real estate industry continues adapting in the future as they have for COVID-19 and the pandemic …
they will be very successful. Brokers and agents are extraordinarily hearty, exceptionally pragmatic, and can handle anything that comes their way.
Stefan Swanepoel, Chairman and CEO, T3 Sixty
It’s not just your neck of the woods: homes priced between $200,000 and $300,000 are hard to find in most Texas markets. In August, Texas had less than two months of housing inventory for those properties, according to the Real Estate Center at Texas A&M University.
“You have people who want to buy a home and can—with job security, income level, and everything else they would need—but they can’t find a home in that price range,” says Real Estate Center Research Economist Luis Torres.
In fact, Texas had three months’ inventory or less for any price below a half million dollars. Demand remains strong even after this summer’s buying frenzy. Here, according to Torres, are the reasons why demand exceeds supply:
Homebuilders are playing catchup. Before COVID-19, homebuilders were trying to meet the demand for homes under $300,000. Shutdowns in the construction industry have delayed new inventory.
Land prices are rising. To make a profit on more-affordable homes, homebuilders are building in cities’ exurbs, where land is cheaper. But as land prices rise everywhere, there’s less affordable land on which to profitably build these homes. This trend has only accelerated during COVID-19.
More Millennials have entered the market. More first-time homebuyers means more competition for affordable homes. Many Millennials have more education and job security, so they are less likely to be affected by the pandemic’s economic effects.
Prospective homebuyers aren’t as affected. The pandemic’s economic effects are being strongly felt by renters and low-wage earners. In general, many people shopping for homes are still employed and/or working from home.
COVID-19 is creating new preferences. Many prospective homebuyers are looking farther away from cities to afford larger homes in less densely populated areas with newly prized amenities like home offices and outdoor space.
Interest rates are historically low. Homebuyers want to take advantage of this opportunity before rates rise again.
Home prices keep rising. Properties that sold in the $200,000-$300,000 range a few years ago might be worth more now.