If you’re on the fence about buying a home, the time to pull the trigger might just be right now. Though uncertainty abounds thanks to the coronavirus outbreak, overall housing conditions are still going strong. Rates are low, home prices are largely holding steady, and there’s still a good window before the homebuying season reaches its peak.
Have you been thinking about buying a house? Here are five reasons you might want to do so soon:
1. Rates are at historic lows.
Mortgage rates hit their lowest point in almost 50 years, with rates hovering around 3 percent or even going lower, according to Mortgage Daily News. Therefore, someone buying a $457,000 home a year ago would now pay $250 less per month at today’s rates. Another report from data firm Black Knight shows that at a 3.25 percent rate, more than 14 million Americans could shave at least 0.75 percent off their interest rate by refinancing.
2. Homebuying power is up.
Thanks to low rates and increasing wages, homebuying power is up considerably for most Americans. According to title insurer First American’s Real House Price Index, “real” home prices—which take into account earnings, interest rates, and nominal home prices—have actually dropped around 6 percent over the past year. In New Mexico, Utah, and North Dakota, they’ve actually fallen 9 percent or more.
3. Busy season is about to end.
Late spring and summertime are the busiest homebuying seasons of the year. During these months, buyer demand is up, prices rise in step, and bidding wars become the norm. In short? It’s harder (and more expensive) to buy a home.
As we enter August and fall becomes closer, demand usually eases which lowers prices and lowers the chance of a bidding war. While anything can happen in 2020, the chances of you getting a better deal on a new home increases in the winter.
4. Coronavirus has competition low.
The uptick of COVID-19 cases in the U.S. has impacted the lives and incomes of many Americans, putting some out of work entirely. As a result, many consumers have had to put major financial purchases on hold (buying a home included).
Though this is certainly no positive for the overall economy, it does mean a less competitive housing market may be on the way in some places—especially ones severely impacted by the outbreak. It could mean lower home prices, fewer bidding wars, and sellers more willing to negotiate to make a deal happen.
Just use precaution if you’re buying in an area with a high number of confirmed coronavirus cases. Stick to virtual tours when possible, avoid large open houses, and see if you can do your closing appointment all online. You should also take the proper sanitary precautions: avoid shaking hands, wash up after touring a property, wear a mask, and stick to the six-foot rule when you’re around other people.
5. Home prices might drop.
Home prices were on a tear last year, but it seems they have more or less steadied in recent months. According to the CoreLogic Home Price Index, prices were up just 0.1 percent between December and January, and the predicted jump from January to February is a mere 0.2 percent.
With coronavirus shutting down many major employers (Disney World and Las Vegas casinos, for example), we could even see declining prices in certain markets, a recent Realtor.com analysis shows. Mark Zandi, the chief economist for Moody’s Analytics, says it’s most likely to happen in the Western region of the country, where markets saw a quick surge in demand and pricing. These include places like Salt Lake City, Denver, and Boise.
6. Touring a home is still possible.
Most builders and communities have begun virtual tours for homes. This allows you to see a model home without having to visit the community. While being a house sight-unseen might seem risky, there's plenty of precedent for it.
If you're not willing to purchase after a virtual tour, travel is also still possible. While air travel should be avoided at all costs, driving to a community has become popular among homebuyers. As long as the area you're traveling to is not experiencing a spike in cases, there's nothing wrong with packing up a cooler, hopping in the car, and making the drive to visit a home.
As always, take the proper precautions: avoid shaking hands, wash up after touring a property, wear a mask, and stick avoid close contact, especially indoors.
7. The future Is uncertain.
There’s no telling how long these conditions will hold or what the next few year will bring—especially with so much up in the air regarding the coronavirus outbreak. What we do know is that mortgage rates are at historic lows, and prices aren’t skyrocketing as they have in years past. There’s also the chance for declining demand and competition in many major markets.
If buying a home is anywhere on your radar, shopping around for rates and properties now might be a wise idea. At the very least, consider getting preapproved with a lender to see what you’d qualify for and take a look at what inventory is available in your market. Depending on how things shake out, there may not be another opportunity like this for a while.
Ready to get started? Reach out to 55places Mortgage today.