May 19th, 2020
Should You Buy a Home During COVID-19?
Original article by Susan Moguel for Realest Blog >
Summertime is usually the busiest season for those buying and selling real estate. However, with the COVID-19 pandemic wreaking havoc on our daily lives, many Americans are wondering whether they should still be shopping for a new home in 2020.
As someone who has been involved in the real estate industry for over 20 years, I’d like to share my thoughts on this subject and answer some of the questions I’ve been asked the most in recent weeks.
With a potential recession looming on the horizon, is now still a good time to buy a house?
COVID-19 has definitely created special circumstances for home buyers. For those with stable sources of income, now is actually a perfect time to buy a home. Interest rates are at a historic low while sellers are increasingly more motivated to complete their real estate transactions because of the reduced buyer traffic.
Because of the economic downturn caused by COVID-19, many home builders and developers are offering special deals, such as discounting prices, waiving closing costs, providing appliance upgrades, making mortgage modifications, and so on.
To give you a concrete example, at the development where I currently work – an “agrihood” concept community in Palm Beach County, FL called Arden – several home builders are currently offering incentives. All Arden home builders are also offering virtual home tours to make it easier for people to home-shop during COVID-19.
Those in the market for a new home have a unique opportunity to take advantage of these and other specials during this time.
What if my new home depreciates due to a recession? Should I continue to rent until the economy improves?
Some prospective homebuyers can understandably be worried whether a potential recession would negatively impact the value of their newly purchased home. In this case, I always recommend looking at the “big picture” by considering your time horizon, which is how long you plan on staying in your new home.
If you plan to live in your home for more than 5 years, you won’t be as affected by the fluctuations in the real estate market that a post-pandemic recession might cause.
By purchasing a home today, buyers can lock in current low interest rates for the next 15-30 years. Unfortunately, when it comes to renting, the only guarantee is that your rent will continue to go up year after year.
Is now a good time for me to commit to a mortgage given current economic uncertainty, and would I get pre-approved?
If you have a stable income and your job is not likely to be affected by either COVID-19 or a potential recession, you are in a good position to take advantage of the current situation. Buyers with better credit scores will also have an advantage as lenders are becoming more selective with mortgage applications in the age of historically low rates.
Should I wait and see if mortgage rates come go down even further in the months ahead?
I’m not a mortgage broker or financial expert, but I know that it is very tough to beat the market, so I wouldn’t recommend making your homebuying decisions based on wishful thinking.
At the end of the day, it all comes down to aligning your needs with your financial capabilities. If you have enough savings and a stable source of income, now is as good time to buy a home as ever.
Any other things I should consider before making a decision to buy a home?
Remember that there’s more to buying a home than prices and interest rates. You should also consider your lifestyle and how your home fits within it. Look at amenities, schools, location, and the overall appeal of the community. Besides making financial sense, your home should contribute to your overall well-being. In other words, you should love where you live.
All in all, the current situation presents a rare opportunity for those who can afford to buy a new home. Interest rates are likely to remain low in the next few months while home builders will certainly be anxious to sell.