The spring is usually peak home-buying season, but with the COVID-19 pandemic stifling the US economy, the housing market has undoubtedly been impacted. If you were thinking about buying a new home pre-pandemic, you may be wondering if you should resume your search once COVID-19 has passed. There are a few important factors that should influence this decision, so read on to learn more about what the housing market looks like now, what the future may hold for those shopping for a home, and if buying a home post-COVID-19 is the right decision for you.
How COVID-19 Has Affected The Housing Market
In uncertain times, people shy away from making big purchases, and with tens of millions of Americans currently filing for unemployment, many people don’t have the financial stability to buy a home. Real estate sites like Zillow and Redfin have seen significant drops in their traffic numbers, which means people are halting their housing search, at least for the time being. Of course, the effects that the pandemic has on the housing market is also dependent on your location. With some states already easing quarantine restrictions, there are areas of the country that haven’t been affected as severely.
In order to prevent the housing market from totally collapsing, the federal government has issued a moratorium on foreclosures, and have prompted lenders to offer payment deferrals or reduced payment options for those who are currently unable to afford their mortgage. The pandemic has pushed mortgage rates lower, though, for some, it may be harder to get mortgage credit. Lenders are posing more restrictions on mortgages, like higher credit score requirements and larger down payments.
Before the pandemic, the housing market was in a pretty tight situation, with many cities experiencing housing shortages. The supply was low, the demand was high, and mortgage rates were low. The spring looked to be shaping up as a competitive season, but COVID-19 changed everything. Demand has dropped significantly, and it’s unknown how long it will take for the market to recover.
What Does The Future Hold?
It’s difficult to predict when the pandemic will come to a close, which means the jury is still out how the housing market will look in the coming months, but experts are starting to come out with predictions. And we can look to previous pandemics and recessions for some guidance about what the future holds. The fact is, the housing market simply cannot make a full recovery until the spread of the virus starts to diminish, and shelter-in-place orders are lifted. Real estate relies so much on face-to-face interaction between Realtors and clients that it can be difficult to confidently buy a home while adhering to social distancing guidelines.
Real estate experts note that shelter-in-place orders cause a city’s number of new home listings to drop significantly after one week. But after a month or so goes by, new home listings slowly start to rise again. In some cities, sites like Zillow have seen their traffic return to pre-pandemic levels, which means that people are still looking to buy a home and the demand for housing is still there. And as new listings start to emerge, it’s just a matter of waiting for the supply to catch up to the demand. It’s likely that the recovery process will be gradual but steady, and it’s unlikely that the virus will affect the housing market for the long term.
Should You Buy A Home After The Pandemic Passes?
Even after the spread of the virus slows, it’s likely that social distancing will stay in place for a while to prevent a resurgence. This means it may not be a great time to shop for a home in person, because of the face-to-face interaction involved. However, virtual meetings and home tours have allowed people to purchase homes even when COVID-19 was at its peak. But the question still remains. As the number of new COVID-19 cases lessens, is it a good time to buy a home?
The answer depends on your current situation. In some areas of the country, the demand may be lower than it was expected to be for this time of year, which means less competition for you. Though at the same time, in the already-tight housing market, there may not be a lot of housing options available to you. But if you’re ready and able to shop for a home, and you feel comfortable about your financial situation, there is no reason to hold back.
If you can qualify for a mortgage, it’s a great time to get one. Take a look at your credit score and how much of a down payment you can currently afford. Remember that some lenders have tightened restrictions on mortgage credits, but if you have the means, it’s predicted that interest rates may stay low for a while. It’s easy to apply for a mortgage online, which means that you don’t have to interact with anyone in person to do so, so you can keep in line with social distancing guidelines.
The COVID-19 pandemic has undoubtedly affected all industries, and the housing market isn’t any different. But while it may take a while for the US economy as a whole to get back on stable ground, the housing market tends to be more resilient, even during a recession. If you feel that you’re in the right place financially to make a home purchase, there are definitely a few pros to moving forward with your home buying journey sooner rather than later.
If you’d like more information on mortgage options or need other financial advice, contact us. Heritage Financial Credit Union is proud to provide its members with the tools and resources they need to achieve financial success. The home buying process can be complicated even when there isn’t a significant pandemic taking place, so it’s good to know you have the support and knowledge of experts on your side through even the most difficult times.