Whether you are a first-time homebuyer or if you are looking to move to a new home, the home-buying process is an exciting, yet overwhelming time. And during this COVID-19 pandemic, buying a home has become an even more nerve-wracking process. You may find yourself asking questions like, ‘What is the impact of the pandemic on the real estate market?’ or ‘Is now a good time to buy a new house?’
Here are some answers to those questions.
How is the COVID-19 Pandemic Affecting the Real Estate Market?
While the real estate market has done pretty well during past economic shocks, there is no clear cut evidence of how it will do during a pandemic.
What is evident now is that U.S. home values have started coming down. There are also reports of slowing home price growth. However, some experts say that the housing market will quickly re-set, though some still have reservations and are saying that the real estate market will fundamentally never be quite the same again after the pandemic.
At the moment, a lot of homes and luxury properties can be purchased at much lower prices. This is likely due to the fall in the share market, numerous people not receiving bonuses or having their businesses affected by lockdowns.
A downturn will most likely affect higher-priced properties more than lower-priced properties.
- Higher-end and expensive markets will be the worst hit.
- Well-located homes in middle-ring suburbs might continue to hold their value.
- Regional markets that don’t depend on hospitality and tourism may not suffer as much.
Will House Prices Drop due to COVID-19?
The National Association of REALTORS® conducted a series of surveys to better understand how the COVID-19 pandemic has been affecting consumer behavior in the housing market. According to their findings, buyer interest has significantly dropped in the recent weeks. Initially, on March 9, 78% of REALTORS® reported that there had been no significant changes in buyer behavior. However, by March 16 – as schools and businesses closed down and as social distancing guidelines started to get stricter – nearly half reported that buyers had become less motivated to purchase residential properties.
Job security and consumer confidence are key purchasing decisions when choosing to buy a property. Some people might delay buying a home due to the financial difficulties they will face (i.e. unemployment, reduced working hours, etc.) due to the pandemic.
Buying a Home During the COVID-19 Pandemic: Should I Do It?
The low-interest-rate environment the real estate market is currently experiencing will not last for a long time. Moreover, property prices will bounce back once the economy regains momentum. However, low-interest rates mean lower home loan repayments since banks are tightening their lending policies. This might make it more difficult for you to secure a home loan.
If you have a stable job and income, then you might have a better chance of home loan approval. In fact, getting pre-approved now is ideal as there may be a cascade of effects that the COVID-19 pandemic will have on lenders and the economy in general.
Due to the COVID-19 pandemic, there are a lot of uncertainties surrounding the real estate market. However, if you are still considering buying a home, here are some general tips that you should keep in mind:
- Explore your mortgage options. There are a lot of mortgage options available at America One Mortgage LLC, each with its own pros and cons. Make sure to choose one that best suits your needs.
- Determine how much you can actually afford. Set a budget and stick to it.
- Get pre-approved for a loan – getting pre-approved now is ideal as there may be a cascade of effects that the COVID-19 pandemic will have on lenders.
- Research neighborhoods and find one that best suits your lifestyle and needs.
The COVID-19 pandemic is causing a lot of confusion, fear, and uncertainties – even in the real estate industry. However, if you are determined to buy a home even in this economy, just make sure to keep these tips in mind!