The coronavirus hit America hard and with little warning. If you were planning to move or buy a home anytime during the first half of 2020, it’s possible your plans were forced to change. Below we’re discussing how COVID-19 has forced a shift in the housing market and what this may mean for hopeful homebuyers.
How COVID-19 Affected the Housing Market
The onset of COVID-19 brought about one of the worst market downturns in over a decade, sending us into a bear market. Though the market has since seen a big upswing, the economy is volatile, small businesses globally are suffering and millions of people have been laid off, furloughed or forced to work reduced hours.
As a result, unique factors affecting the housing market amidst the pandemic have arisen. These include:
- High levels of unemployment across the country
- Sudden financial uncertainty for families previously looking to purchase a home
- A lack of willingness for buyers and agents to attend open houses
- Sellers having second thoughts and pulling their original listings off the market
While these factors may impact the housing market in a negative way, it’s important to note that the recent market downturn has actually produced some favorable conditions for buyers. Mortgage rates are at a low right now. According to Freddie Mac, a 30-year fixed-rate mortgage is at 3.32 percent, compared to 4.14 percent in early May of 2019.1 If you are in a financially stable position and looking to buy, this may still be an opportune time to purchase a home. Before you do, check in with your financial advisor to go over the impact of this important decision first.
How Are Real Estate Agents Able to Sell Houses?
Just like most other business owners or public-facing professionals, real estate agents have been forced to either get creative or miss out on opportunities to make an income. For example, some agents are offering virtual showings and video house tours in order to show properties to buyers while keeping everyone comfortable and safe.
Others may still be offering in-person meetings, but with extra health and safety precautions in place. For example, all parties may be asked to wear masks and gloves, and offices or houses are extensively cleaned and disinfected between visits.
While virtual or limited-contact showings are a challenge, they offer serious buyers a chance to continue on their homebuying journey during the COVID-19 pandemic.
It’s fairly common for the seller of a home to cover the closing costs. But with the market down and limited inventory available, buyers may be expected to pay both their downpayment and additional closing costs. If you’re a buyer in the market, be prepared and budget for these additional expenses.
Maybe you were initially looking to move, but you’ve since changed your mind as a result of COVID-19. If you’ve decided to stay put for the foreseeable future, you may still be considering taking advantage of these low mortgage rates to refinance your home. Before you do, you’ll want to make sure the costs involved with refinancing are worth the potential monthly savings. Remember, the cost of refinancing can reach a few thousand dollars once you factor in fees for appraisals, title searches, etc.
These are difficult times for the entire country, but if you feel confident in your finances and job security, then now could still be a good time to purchase a home with low-interest rates. Be prepared for some bumps in the road, as times are uncertain, and we don’t know for sure when things will return to normal. Speaking with a financial advisor in conjunction with your real estate agent is a smart start to making a decision and determining your next move.