Agents still optimistic as rural areas draw attention, interest rates remain low
After years of record-setting sales levels, the future of real estate in Fredericksburg and Gillespie County is uncertain as the country begins to navigate the effects of a global pandemic.
“The last few years in real estate have continually been better than previous years. We are always setting records in terms of total sales and properties sold,” said Mike Starks, Realtor with RE/MAX Town & Country Fredericksburg Texas and board member with the Hill Country Board of Realtors.
But when Texas Gov. Greg Abbott began encouraging people to stay home because of the coronavirus, Starks said there was a dramatic fall in the industry.
“We saw a drop in overall activity. That said, we haven’t been in a standstill but we have certainly been taking more precautions as a real estate community,” Starks said.
By the numbers
After the first quarter (through March), total sales were at an all-time high, according to Starks and Greg Oehler, broker of Texas Hills Realty, LLC.
“I think we were all expecting the first quarter to set records — the economy was great, the stock market was great and Fredericksburg is increasingly becoming a desirable place to live,” Starks said.
Sales reached $66 million, compared to $57 million reported in the first quarter in 2019.
“That’s an increase of almost 14%, plus the total number of properties sold so far in 2020 is also up,” Starks said.
In 2020 so far, 160 properties have been sold compared to 121 in the previous year.
Homes sold in-town totaled more than $27.5 million, a $10 million increase from 2019. This made for a whopping increase of 35% in total dollars sold, Starks said.
While numbers from April 2020 are still trickling in, Starks said there were 39 properties listed compared to 53 in April 2019.
In April 2020, the average list price for a home in Gillespie County was $493,490, compared to $438,245 the previous year.
Homes sold in April 2020 averaged 158 days on the market, compared to 175 in 2019.
But while April looked good overall, Starks said the market was down 18% in total sales.
“I think it’s way too early to tell what May will look like but I suspect we will see down sales in May and June should pick up,” Starks said.
By the end of summer and start of fall, both Starks and Oehler predict that there will be pent-up demand, which will drive sales. Inventory may be the problem though.
“If we don’t get more inventory and the demand stays high, we will probably see prices increase all the more,” Starks said. “Buyers come thinking our market has been decimated and prices are in decline, but sellers for the most part are OK if it takes a little longer. Sellers are more motivated.”
“I think we will see a pause in the market overall but we see a pent-up demand that will find a way to sell and buy once things loosen up,” Oehler said.
Starks added many of the sales will be dependent on the economy, especially oil prices. Interest rates are expected to remain low.
Buying and selling
With the economy fluctuating and interest rates low, buyers and sellers are still looking for real estate opportunities.
Both Starks and Oehler say there is more demand from people moving from large cities to rural settings. And that’s not just happening in Fredericksburg but across the nation.
“People have always wanted to come here and move here because it’s in a desirable location but this virus has really pushed them along and encouraged them to move out here,” Starks said. “We have had calls from people across the state who have always wanted to move here and now that they have been home for more than 30 days, they are ready to find a piece of land in Fredericksburg and get some elbow room.”
Agents are now offering virtual tours of homes and providing masks and gloves for those that still want to take in-home tours. Oehler said his office is immediately sanitized after someone comes in. Agents open doors, turn on lights and touch other necessary things with gloved hands.
“Buyers tend to look more online for most of their decision and come to view the properties once they have narrowed them down,” Oehler said.
All contract signings are taking place on the porches of local title companies as another form of precaution.
Both Oehler and Starks predict these procedures could extend after the pandemic is over.
With his office situated just off Main Street, Oehler has seen far less traffic.
“With my office window facing the Sunday House Motel, most days there are hardly any vehicles in the lot other than staff and maintenance personnel,” he said. “Visitor numbers have declined significantly so on-site showing numbers have decreased. However, online viewings are up significantly.”
Oehler also predicts infection rates of the virus could rise after a lull, creating hotspots.
“Retail stores, bed and breakfasts, and hotels will have to have much more sanitation,” Oehler said. “While laws prohibit large gatherings, some commercial property owners cannot function financially with restrained crowd numbers. Many will struggle to pay their rent and other bills, forcing them out.”
Other hard hits
Other major hits to the national economy can be compared to the recession in 2008 or in the months following 9/11.
“Overall sales dropped during those times but prices did not drop,” Starks said. “I think that is what we could see that happening here — prices should hold.”
Starks said some bed and breakfast owners have seen a dramatic drop in revenue with fewer visitors coming to town but not many have listed their properties or converted from short-term to long-term rentals. Stark expects more people to travel close to home rather than traveling on an airplane or going overseas.
“I think the late summer and early fall is going to play into the hospitality industry and we will see a better end of the year,” he said.
Oehler predicts the pandemic will open up more commercial rental space.
“I have personally seen two Main Street properties lose their tenants and I suspect new tenants will tie up leases with lower rates,” Oehler said. “I will be working with landlords who have prime Main Street lease space in the near future.”