Does the coronavirus have you thinking twice about home shopping during the typically active spring real estate season? While home buyers would otherwise be checking out properties, negotiating and closing on new places during this peak time of year, the coronavirus outbreak—with its quarantine measures and economic certainties—might have you wondering whether you can and should shop for a home right now or wait until this crisis comes to an end. Here is some information to help you decide what to do.
So, what state is the housing market in right now anyway?
While that depends on how bad an outbreak an area is suffering, most markets are feeling some sort of hit. According to Lawrence Yun, chief economist for the National Association of Realtors, the coronavirus is leading to fewer home buyers searching in the marketplace, as well as some listings being delayed.
The most recent NAR Flash Survey: Economic Pulse, conducted March 16 and 17, found that 48 percent of real estate agents have noticed a decrease in buyer interest attributable to the coronavirus outbreak. However, almost an equal number of members (45 percent) said that they believe lower-than-average mortgage rates are tempting buyers to shop around anyway, without any significant overall change in buyer behavior.
For those who are determined to buy a home, there is an opportunity out there
One of the best buyer’s markets that you’re likely to have ever seen is currently emerging, complete with excess supply and interest rates hovering at historic lows. In fact, you can own a home for less per month than you can rent an equivalent property in most areas.
With fewer home buyers out there looking, you have less competition in your way
Buyers who are not motivated and committed have dropped off, meaning there is less competition. The window of opportunity for buyers won’t stay open wide forever, though, with NAR data showing that there was a housing shortage before the outbreak. “The temporary softening of the real estate market will likely be followed by a strong rebound, once the quarantine is lifted,” says Yun.
This pent-up demand could eventually push home prices higher, and that could mean that the time to look for bargains is now. Bottom line: If social distancing has made you realize you don’t love the place where you’re currently spending most of your time, it’s a good time to consider buying.
How the housing industry is adapting to keep protect buyers
Although you might be a little wary of being out and about checking out real estate, it still is possible to do so and stay safe. The industry has rapidly adapted, introducing approaches that minimize exposure to the virus.
For example, many agents are now working remotely and conducting most of their business virtually. Buyer and seller consultations are beginning to transition to virtual meetings with success, and while open houses or showings may not be easy to arrange because of quarantine or other safety issues, real estate agents have stepped up to the plate by offering virtual tours. Clients can ask for videos of whatever properties they want to see, and even FaceTime from a property.
While those who are immunocompromised may want to stay home, if you’re otherwise healthy, it also is still possible to see some homes in person. You’ll want to take some precautions before you go, though. Hand sanitizer at the door has become the norm, as well as shoe covers. During the tour, it’s also now customary for the listing agent to open all doors, so that home buyer can explore closets and other enclosed spaces without touching anything as they look.
If you do make an offer that’s accepted and you head to the closing table, real estate agents and attorneys also are adapting to remote closings, to keep you out of a crowded conference room.
How to weigh economic concerns
Coronavirus aside, anyone thinking about buying a home also is likely to be weighing whether it’s a smart idea when the economy is facing difficult times. In the same way, you can’t easily time a stock purchase to make a profit, however, you can’t easily time a home purchase either. Just keep in mind that while current market conditions offer an opportunity for homebuyers to lock in historically low-interest rates for a mortgage, rates actually are rising quickly because so many people are refinancing. If you wait too long to buy, you may miss out on saving money.
Besides mortgage rates, home buyers are probably wondering about the stability of their income as fear of layoffs loom
Placing a property under contract now and locking in a low-interest rate gives a buyer some control at a time of relative uncertainty. The takeaway? It’s more important now than ever to get pre-approved for a mortgage, so you can calculate your home-buying budget accurately. If you’re worried about layoffs, you should consider buying a home well under budget so you have enough money left for closing costs, home maintenance and a rainy day fund. Toward that end, research ways to reduce your closing costs.
For instance, many loans allow sellers to contribute up to 6 percent of the sale price to the buyer as a closing cost credit. You’ll also want to figure out how much you need to set aside for yearly home maintenance and repairs. A smart budget is to have between 1 percent and 4 percent of the purchase price of your home. Finally, be sure to put aside an emergency fund for unexpected repairs. On average, it’s a good idea to put away 1 percent to 3 percent of a home’s value in cash reserves.