This is our newsletter for tomorrow, April 17. Before the crisis, we sent one newsletter per month that included basic YOY statistics for the previous month, commentary on those stats, and interesting news. Since COVID began, we’ve been sending a post a week, as there is a lot of interesting news, statistics, and content. We’ve received good feedback and we’ll continue writing and sending these as long we think it’s relevant and interesting.
I wrote on this topic last week in a more conversational tone and then rewrote this for the newsletter. The April blogging challenge has been positive in that it’s helping me identify what’s truly relevant & interesting, and it’s helping me dig into those topics more deeply.
April 17th Newsletter:
We hope that you and your loved ones are staying safe during the ongoing crisis. We’re reaching out today to discuss the recently released March 2020 Austin real estate market statistics and leading indicators.
Our friends at Independence Title released the March 2020 market statistics this week that are available for download here. Independence provides a valuable resource in these statistics and we always look forward to receiving them.
This month, we are looking past the traditional metrics – median/average sold price, days on market, etc – because these are lagging indicators. Almost all properties sold in March were under contract in February or earlier. This means that the properties sold and closed in March do not have a sales price affected by the COVID-19 crisis. We did take note that pending contracts in March 2020 were down -8.4% over March 2019. We believe that this is the beginning of a downward trend that will trend back upwards at some point in the future (and hopefully soon!)
If we discount lagging indicators, then which leading indicators do we follow?
We watch pending contracts very closely, but those generally lag behind earlier economic indicators. The Consumer Confidence Index & University of Michigan’s Consumer Sentiment research are both leading indicators of the US economy that are regarded as two of the most accurate leading indicators. US Consumer Confidence is at 71, currently. The low during the 2008 financial crisis was 55.3. It was at 101 in February 2020.
As a company, we monitor & track hyper-local metrics. We measure and track local Austin market metrics, which are lagging indicators. When there are more homes under contract & sold, and when prices go up, we know that the market has already performed better. This is helpful to monitor when the market it isn’t in flux. However, it’s better to monitor leading indicators in order to know before sales data begins to turn. National leading indicators like the CCI report only once per month and don’t measure consumer sentiment at the local level. However, there are local indicators that we track in order to know when the market changes as early as possible:
- Consultation & Showing Inquiries: We measure the year over year volume of inbound inquiries to view properties and/or to speak with agents about purchases or sales. When these begin trending up, we will know that the market is improving. Right now, our post-COVID qualified web inquiries are down more than 41%.
- Web Traffic: We have a highly trafficked website with years of data. When site traffic declines (year over year) we know the market is slowing and when it begins to trend upwards, we know that it’s improving. We analyze our web traffic overall, as well as organic & paid traffic, in order to identify trends. Our overall post-COVID traffic is down 47% and targeted search traffic is down 76%.
- New Purchase Applications: When buyers begin to shop for properties, they apply for loans. When there is more buyer activity, more buyers apply for loans, and vice versa. We stay in close contact with our preferred lenders to monitor this activity. Our lender partners have reported that new purchase applications were down 32% in March.
Well isn’t that depressing! Why send this email?
We’re not sending this email to point out how bad things are. There has never been a recession that didn’t reverse course and most recessions are short. We strongly believe that objectively monitoring and measuring leading indicators will help us know as soon as possible when the Austin market begins to recover. Traditional market statistics are fantastic, but in times of crisis, leading indicators become more important.
We fully expect to share positive news about leading indicators in the near future, and we will happily and expeditiously do so!