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.
What Are We Seeing In Local Markets?
Surprisingly, prices have remained fairly steady in Nashville and surrounding areas. Often housing price changes can lag economic events, so what comes next may be difficult to predict. Some forecasters have predicted a wave of pent-up demand and inventory as life finds its new normal, but unemployment and other factors related to market recession could play a role in inventory as well as we move into the summer months.
One thing is for certain. With fewer eyes on a potential dream house for you and your family, there should be less competition in many of the properties on the market. For the past several years in Nashville, this really hasn't been the case. Competition to secure properties in our rapidly growing city has been at an all-time high, so this temporary decline in activity likely means a greater probability that motivated buyers will have a little extra time at their disposal to help secure that next house.
If you are looking to move and motivated to sell your current home and find a new one this summer, you should likely reconsider your order of operations. In Nashville over the past decade, listing a home and finding a buyer has never been easier. Now things are a little more uncertain. Cash is king. If your family is in a cash position where you can afford to wait out selling your home, then now is a great time to find that home of your dreams and secure financing at very low long-term rates.
If, however, you can't handle making two mortgage payments for a few extra months, then consider moving forward with contingencies on any offer you make and try to build in ample time before closing on your purchase. Historically, this wouldn't create a very strong offer and you might lose out to competition. Now, however, competition may just be lacking and you may have an opportunity to make this type of purchase without losing out on your next family home.
No matter what, make sure you have a plan and that you consider your options with your financial advisor, mortgage loan officer, and real estate agent. Stay safe and take as many precautions as possible. Think outside the box to leverage technology when selling your current home. Help potential buyers overcome the fear of being in your own house while it is on the market. As always, reach out to us or our network of great professionals if you need any assistance. Good luck!