If you are a homeowner or a residential property investor then it will be important for you to understand the implications of coronavirus on housing market. Will the market survive or crash?
The impact of coronavirus pandemic is likely to be more severe than the 2008 recession. People are comparing this with the 1930’s depression. With people dying of COVID-19, there are serious concerns on how the real estate market will be affected.
Firstly, if you are hunting for your first home, you can use this situation in your favor. Before the outbreak of COVID-19, the United States of America saw steady increases in prices of homes. The month of January and February were good for the housing industry. With the advent of the Coronavirus, the economy has been hit severely.
The Hand of the Federal Reserve on the Housing Market
The Federal Reserve has reduced the rate of interest twice. So is the case with countries world over. This is an effort to protect the economy from factors like disruption and fear. As a result, mortgage rates will hit historic lows and will continue to remain low some time in foreseeable future.
Coronavirus Housing Market: Effect on Housing Market
In spite of the fact that mortgage rates are significantly low, the housing market will suffer adversely. There are record job losses and over 30 million are expected to claim unemployment and out-of-work benefits. These people may default on their mortgages bringing the housing prices down thereby creating opportunities for investors and home buyers who are fortunate not to lose their jobs.
Will the Market Crash in My Region?
The impact of Coronavirus on housing market in your region depends on many factors. Undeniably, the current situation is extremely complicated. It will depend on where you live. Coronavirus has affected states differently. There are places where the impact has been minimal and economic restrictions in these states will be lifted earlier than others.
The housing price will also depend upon how states view housing. States like Wisconsin and Connecticut, real estate is classified as an essential service. On the other hand, Pennsylvania and New York doesn’t treat real estate as an essential. Then, you have states like California that had to revisit and claim real estate as an essential service because of its strong hand on the economy. In Colorado, real estate appraisers and accountants, along with title companies are marked as critical services.
Problems You are Likely to Face
It will be difficult for you to find agents who can show you potential properties and close deals. Social distancing is the primary reason behind this.
Even if real estate agents come out to work, other sectors like mortgage lenders, attorney and inspectors will not be easy to find. For example, in the state of California real estate experts’ question on the safety of professionals who engage strangers. These doubts are valid, amongst companies and individuals who are into the housing market.
Is it Good Time to Sell Your Property?
Will the market crash affect your sale? If you have prepared your home for sale before the virus hit, there are few reasons why you must not back off. You will need to weigh pros and cons and assess your situation and need to sell. Coronavirus may have reduced the competition for your home in the region. This means, you might have a good chance of bagging a good deal. In fact, you may get better price today than wait when default mortgage properties hit the market! With fewer homes on the market, your property may receive all the attention it needs.
Opportunity for Investors and Home Buyers
Likewise, if you are cashed up and in good financial health, this may be a god sent opportunity, mortgage rates and reduced competition will favor you. The Coronavirus housing market is certainly creating volatility that is likely to remain for a considerable amount of time. If your job is stable, and if you have a steady flow of income – now would be a perfect time to buy a new home or invest. Remember great fortunes are made during times of crises.
Tips on Hunting for Properties during COVID-19
Those who are interested in seeing new properties should keep certain things in mind. First of all, get in touch with real estate agent who know how to help you. They can arrange for a virtual tour of the property. You should not rush to view a property. Ask the agent for virtual viewing and 3D images of the property. Inspections should be done with great care. Ensure that you wear gloves and maintain a good amount of social distance from strangers. Also, don’t touch anything inside the property. This way, you will be able to protect yourself from the risks of Coronavirus.
Closing the Deal!
Any purchase will remain incomplete till you close the deal. Unfortunately, COVID-19 can introduce delays in the overall process. You can opt for online methods. For instance, the documents can be signed electronically. This may not work well in all the states. Please check with your agent.
In case of delays you need to extend the loan. For this, you need to talk to you bank or mortgage lender and also explain difficulties to the seller to get an extension to close the deal.
Don’t get discouraged by delays. Try and find solutions.
The Ultimate Bottom Line
During the SARS outbreak, the housing market in Hong Kong fell quite sharply. Yet, the overall value of the properties rose once the threat of virus was over. This theory holds good for COVID-19. Though the number of buyers and sellers may reduce significantly; the market will always bounce back.
Don’t let this opportunity of low prices and mortgage rates pass. This situation may not happen again in the upcoming decade or two! So, make the most from the rock bottom values. Do consider closing your existing debt, and refinancing any mortgage loan. Use the reduced rate of interest to save money. Stay focused and nimble. Do not get frozen by fear but take action. Market always corrects itself especially so real estate.