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The Coronavirus and Housing Market—3 Things You Should Know
Buying a home is one of life’s biggest financial moves, even in the best of times. Add a global pandemic into the mix, and the decision to purchase a home gains added gravity.
It’s important to know how the housing market is performing, before you pursue a mortgage and set off to find your dream home. Even more important is having knowledge of your own financial situation, especially with potential employment instability around COVID-19.
We’re sharing our insights into what home buyers need to know about the current state of the housing market. Things are changing every day, so be sure to check back for more information.
Keep this in mind first…
Before we dive in, it’s important to know how the home buying experience will change amid concerns of COVID-19. Like most industries, mortgage and real estate are fine-tuning the way clients are served and transactions are processed.
Here are a few things to keep in mind, as you prepare to house hunt:
- You will need a mortgage preapproval. With high stakes for public health and limited time to show properties, Realtors® will not entertain buyers who are not possess a recent preapproval letter stating how much they are able to borrow.
- Home tours are now private and expedient. The days of spending hours meandering through an open house with a magnifying glass are over—at least for now. To protect buyers, professionals, and sellers, in-person showings are usually limited to 15 minutes or so and involve heavy online research before you even physically arrive at the property.
- Timelines may be different. Prepare for snags to potentially extend the transaction process, depending on where you live. It’s best to build in time upfront in your search, so you’re not left stranded with nothing but unmet expectations.
Getting a mortgage preapproval letter will go a long way to getting the home buying process, so be sure to take this essential step. Additionally, don’t forget to factor in additional time and research to make your move a successful one.
Alright, ready to learn more about the current state of the housing market? Great! Let’s dive in.
- The housing market is (relatively) stable
You may be tempted to assume that a pandemic would completely take out the housing market, but that’s not what we’re seeing. In fact, we’re not seeing that at all.
Housing prices have remained more-or-less the same, as they were before the onset of COVID-19. You can pretty much expect a standard pricing experience, at least as we get ready to go into the month of May.
Additionally, listings have remained stable. In Rhode Island, for example, housing sales remained active during March 2020. Moreover, listings increased during the peak of the viral crisis, which means they are up from year-to-year. When all was said and done, median home prices rose by over 13 percent in the Ocean State last month alone, up from 10 percent this past February.
In Massachusetts, single-family home sales rose by over 6 points from last year, whereas condominium sales rose by 13.6 percent from 2019. Home sales are up in Massachusetts and have been for the past 12 months.
In short, the market is still amiable for both buyers and sellers, with most of the market changes resulting in positive gains that increased since 2019.
- Interest rates are low—really low
This means that borrowing can become more manageable with potentially lower monthly payments. This makes sense. The lower your rate is, the lower your monthly payment will be. This has caused many first-time buyers to inquire about locking in rates now for better deals in the long term.
Low interest rates can serve as a great incentive for buyers, but remember, you should have a clear and full understanding of your financial picture before you make decisions based on interest rates alone.
Here are some questions to ask yourself, before you jump on lower interest rates:
- Are you certain your job will be there after this crisis is over?
- How is your debt load? Will increase or decrease as time goes on?
Given the current realities around COVID-19, it will be helpful for you to have as much information upfront as possible. Being as sure as you can will help you become a successful homeowner.
- The best time to buy is when you’re ready
Purchasing a home is an individual choice that needs to make sense for the buyer. The best time to buy a home, therefore, is when you’re ready and able to do so.
Many people ask us about market conditions, home prices, “buyers’ markets,” and even “sellers’ markets.” The fact is that if you’re preapproved for a mortgage and your debt-to-income ratio hasn’t changed much, you have more latitude than you think, when it comes to buying a home.
Many of the factors that contribute to choosing to buy are already in your control, such as credit score, how much you’re currently earning, and what kind of home you’re looking for. If these financial elements are still stable for you, then the housing market should not affect you too much, especially one that is gaining steam, despite public health concerns.
If you’re ready to buy, but you don’t yet have a mortgage preapproval, you should contact a mortgage broker to help you get the required preapproval.
We’re here to help
No matter what’s going on in the world, buying a home is a big deal. It’s important to consult the facts to see whether or not you’re in a position to buy a home at this time.
If you have questions about buying a home during this time and how the pandemic will affect your ability to buy and keep a home, you’re welcome to get in touch to speak with one of our professional loan officers.
We’re here to serve you when it counts.
Real estate may be changing, but it’s definitely not going anywhere. ???? If you’re looking to buy a home during this unprecedented time, there are things you should know to make the most of your search. Our own Bob Barlow takes the time to explain how to house hunt in a pandemic, so you can become a successful homeowner. ????
Check out ???? Bob’s video ????, where he explains the importance of preapproval and other precautionary measures being taken with house hunters.