Spring is typically the season when the home-buying market picks up. But has the current COVID-19 outbreak changed all that? If you were planning to buy a new home this spring, should you forget your plans or still move forward?
The Coronavirus has left us with so many financial questions. No one can say for sure when this pandemic will end, or the lasting impact it will have on the economy. Experts can only look at past economic crises in an attempt to predict what the financial future will look like in the United States. Let’s take a look at the mid-pandemic housing market and the wisdom of purchasing a home during a time of economic instability.
What’s happening to the housing market?
Home sales during February 2020 were the strongest they’ve been in the country since 2007, topping 5 million sales. Factors, like falling interest rates and a booming economy, contributed to the thriving housing market. But two months later, experts are already seeing a sharp decline in buying.
This downturn has likely been triggered by the economic devastation caused by the outbreak, including widespread job insecurity, thousands of closed businesses and millions of employees on leave from work.
The decrease in home sales is also likely due to practical reasons. When people are worried about their health, it’s difficult for them to think about purchasing a new home. Meeting with potential sellers, real estate agents and looking at properties is also complicated when trying to maintain social distancing.
A dwindling housing market does not automatically mean this isn’t a good time to buy a house. In fact, times of financial uncertainty generally lead to falling mortgage rates and the ease of credit qualifications. Mortgage rates already reached a record low in the beginning of March, prompting some buyers to rush into new home purchases.
Some market experts also believe the Coronavirus pandemic will cause an eventual spike in home sales as buyers, fearing a recession, will want the stability and control homeownership brings.
What to consider when buying a house during a pandemic
Before you jump into a home purchase at this time, you may want to consider the following factors.
- How stable is your income? If you have reason to believe you might be laid off soon, you may want to hold off on your purchase.
- How long do you plan on living in this home? If you plan on selling within the next few years, you may come out at a loss due to a falling housing market and an unstable economy.
- Will you have savings left after buying a home? As the economy heads toward a probable recession, this is not the best time to be without a savings cushion.
If you can afford the purchase, and your income isn’t threatened by the economic instability, the favorable interest rates and looser qualifications during this pandemic can make it a good time to buy a new home.
To learn more about the mortgage loan options we offer, including current rates, visit our website. You can also check out our Home Buyers Guide to gain a better understanding of the home-buying process before you take the next step.