The effects of the coronavirus pandemic have been widespread, to the point where there are now millions of people throughout the world in some state of lockdown. If you were getting ready to buy or sell property when the world came to a halt, then you’ll have an interest in how COVID-19 is affecting the real estate market.
Current market predictions are ranging from carefully optimistic to downright panicked. Even under the best circumstances, it’s extremely difficult to accurately predict exactly what the real estate market will look like in the future, and experts are currently in disagreement as to what our current crisis means for the market down the line.
However, we can analyze our current situation to make some educated guesses about what could be happening several months from now.
If you’re looking to buy or sell a property during the lockdown, then the good news is that you are legally able to do so. The federal government has listed real estate services as essential, so unless your local government has placed an exception on your area, you can continue with transactions. However, you’ll probably need to take advantage of virtual solutions for some parts of the process to maintain social distancing.
In many ways, the coronavirus pandemic could ultimately turn out to be good news for people looking to buy. Mortgage rates are currently low, and prices have also dipped; the average price for new home listings at the end of March was down by 6%, and it dropped another four thousand dollars by April 10.
Of course, given the relatively low prices, it might be tempting to wait to buy in case rates drop even more. But we don’t know how long coronavirus-induced restrictions and the resulting price dip will last, so prices could begin to rise within the next few months and return to normal—meaning it’s not a bad idea to act fast to take advantage of the market’s present lull.
You may be wary about buying a house while so many quarantine restrictions are still in place, but the good news is that much of the home-buying process can happen online. For example, you can take virtual walkthroughs using your computer, and the home inspection and signing of the papers can happen online too. You should do a final walkthrough in person, but even that can be done relatively safely by not touching items in the home and staying a safe distance from other people.
The slight shift in favor of buyers might be cause for concern for sellers, but it doesn’t have to be. There are two things to remember.
The first is that it’s still a seller’s market, even with the slight drop in house prices. Before the outbreak, the housing market was in its best state in a decade, and Fannie Mae predicts that housing prices will return to normal and continue rising by the end of the year.
The second is that experts don’t predict this economic downturn will last as long as the 2008 recession. While in that recession, the market was maxed out due to over-lending, our current market is being affected by a freak external force rather than internal weaknesses, meaning it should have a quick recovery after COVID-19 restrictions ease up.
Some experts are doubtful of the optimistic forecasts, as they are, understandably, concerned about the length the crisis will persist. The longer people are stuck in limbo, the harder it will be for the economy as a whole to recover, and the less money the average spender will have for buying a house and getting approved for loans in the first place. The California Association of Realtors is one of these organizations taking a more cautious stance, as California is one of the states the virus has hit hardest.
If you’re currently selling your home but not seeing much buyer interest, sit tight and consider putting your process on pause for a few months. Fall is (understandably) now expected to be the busiest season for real estate this year, as opposed to the normally busy spring and summer months.
For help buying and selling during these unique circumstances, Amanica’s Moreno Valley realtors are here to help.