“We didn’t see any affect or impact in our applications as a result of the government shut down,” Atif Ahmad, President & Founder of Adelo Mortgage shared.
According to Atif, the impacts within the Austin area were minimal mainly because USDA loans, funded by the government, were the most affected type of loan product. USDA loans are designed to stimulate growth in rural and suburban areas, which doesn’t typically apply to Austin area properties.
According to a survey done by National Association of Realtors (NAR) January 9th, 2019, it appears that real estate transactions were impacted by the Government Shutdown, but not in the extreme. The most common impact nationally, at 25 percent was the buyer decided not to buy due to general economic uncertainty, even though they were not a federal government employee; 9 percent had clients who decided not to buy, as their clients are federal government employees.
What else is driving buyers forward or pulling them back in our local market? Atif went on to share what might be holding buyers back in the Austin market, and he’s right in sync with the NAR information.
“I think the two main areas that are keeping buyers a little more tentative are, one, the middle ground we seem to be in with our economy. And two, the relative shortage in supply in our market. Although our economy has been improving, the second half of 2018 and in particular the last quarter of 2018, we started to see signs of an overall flattening. We had a 10-15% correction in the stock market, we saw slowing growth in Europe and Asian economies, a continued tariff dispute with China, the on-going volatility with our current administration, and not to mention the shutdown. As a result, the Fed has also lowered its forecast for the near-term outlook. All of this puts some people on the fence waiting out for a clear path on whether things are going up or are we due for some deeper correction; this unknown tends to slow people down.”
Does that mean it’s a bad time to sell? No, it doesn’t. For every coin has a flip side too. Per Atif and national economic trends showing this slowing pace can also lead to slower appreciation of homes and stable rates.
Per Atif, “The flip side to a potential cooling economy is that rates hold and tend to be more favorable.”
NAR Chief Economist Lawrence Yun also points out the silver lining to the cooling economy and what it means for real estate in a recent statement.
“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home appreciation. But there is still inadequate inventory on the lower-priced points and too many in upper priced points.”
Our Austin market remains in short supply with only 1.4 months of inventory which keeps us in a seller’s market. We are not seeing a rising of inventory locally. The most difficult and competitive market is under $300,000 in multiple areas in and around Austin. You might think that Austin’s median sales price of $376,875 would put us in a slower real estate economy, but the average days on market remains under two months at 48 days! Atif shared a great point on that concept, “We have had such good growth in the types of jobs coming to Austin, there have been also no shortage of people that can afford higher priced homes.”
*All information from Austin Board of Realtors, National Association of Realtors website, and Atif Ahmad of Adelo Mortgage.