America is going through some unprecedented events in its history, so many Americans are understandably nervous about their futures. That anxiety is making a lot of people second-guess every major financial move they might make, including whether or not to buy a house right now.
Why Are People So Anxious About Buying a Home Right Now?
Data from search engine giant Google indicates that searches for “Should I buy a house” have been rising rapidly, indicating that potential homebuyers are both excited by the incredibly low interest rates available on loans and mortgages and scared by potential financial insecurity.
Admittedly, there’s a lot going on to concern people. There’s an oil war happening between Russia and Saudia Arabia that sent the stock market into a spiral, the viral outbreak of COVID-19 that’s upending normal business operations around the world and the growing likelihood of a national (possibly worldwide) recession just around the corner.
On the other hand, the 30-year fixed mortgage rate fell to record lows in the last few weeks. If you’re already in the market to buy, being gun-shy about a purchase could cause you to miss a golden opportunity to lock in that low, low rate. That could translate to deep regrets later and an unnecessarily hefty mortgage.
Here’s my best take on what you should consider and what to expect during this volatile time:
How Will the Coronavirus Affect Home Sales?
Frankly, it’s too early to determine exactly how deeply the effects of the coronavirus are going to be felt in the housing industry — but experts do have some predictions. Among them:
- New housing projects are going to be massively delayed due to the pandemic. Supply chains are being disrupted and normal business operations may take months to resume on builds. Buyers who want to be in a home soon may prefer to buy existing homes, instead of building new ones.
- Home sales are likely to drastically slow for a brief period in the foreseeable future. In part, that’s because people aren’t willing to take a risk of coming into contact with someone who is infected while they’re looking for a new home or showing their existing one.
- Once the pandemic fades, both potential buyers and sellers may struggle due to problems with their local economies from a combination of the oil war and the aftershocks of the viral outbreak in the business sector. This could translate into a weaker housing market in specific areas.
- The most serious disruption in house sales will lift when the outbreak of the coronavirus is over.
Homebuyers are, however, going to need to adapt to an all-new home buying process. The National Association of Realtors says that one out of every four sellers has already changed how they show their homes to prospective buyers due to contagion concerns. Virtual tours, for example, may become more common to weed out less-interested buyers before home visits are scheduled.
How Does a Presidential Election Affect Home Sales?
The 2020 Presidential election is another factor that’s playing into the real estate world’s overall picture right now. The election is already contentious and there are months yet to go before November. The more uncertain the projected results of an election, and the closer it comes to election day, the slower house sales will typically become. This is particularly true in the upper-level and luxury home markets.
If you’re hoping that will translate into a big drop in housing prices just about the time you’re ready to buy, however, you need to reconsider your strategy. Typically speaking, prices don’t drop significantly because home sales pick up again quickly once the election is over.
What Do These Factors Mean All Together?
New situations that can affect the market are constantly evolving, but it doesn’t appear that buyers are going to back away from the housing market right now. The majority of realtors surveyed by the National Realtors Association since the stock market turned bearish said that they haven’t seen any decrease in interested new buyers. People are simply more focused on their own financial realities than they are the stock market.
In fact, the competition among buyers for existing homes may be a little stronger in future months because of longer waits for new homes. If you’re in a financial position that allows you to weather the current economic upsets, you probably don’t want to miss out on the fantastic interest rates being offered. Just keep in mind that everybody else is also trying to take advantage of those historically low mortgage rates, including existing homeowners. Banks are taking 479.2% more refinancing applications right now than they were just a year earlier. The sudden influx of applications is slowing down the process of mortgage approvals everywhere.
New buyers may also experience a slowed-down mortgage process as a result of all of the activity. It’s particularly smart to get a preapproval for your mortgage before you go looking for your next home. You want sellers to know that you’re a serious buyer — especially as they’re more cautious about granting home viewings. A pre-approval also strengthens any offer you do make, which could help you if there are multiple offers on the home you want.
Indiana is a beautiful place to be and the low interest rates being offered on mortgages have the potential to benefit a lot of home buyers. If you’re ready to look for a home in Indiana, I can help. Shoot me an email or a phone call. A new home changes everything!