Real estate continues to flex its unprecedented strength in 2020, with home sales up 32 percent compared to this time last year. The housing boom can be attributed to mortgage rates – setting another all-time low for the 14th time this year. Historically low interest rates benefit both home buyers and sellers: enticing buyers to buy and alluring sellers to sell above the asking price. With rates in mind, is now the best time to enter the housing market?
Following three consecutive months of positive growth, new data from Fannie Mae revealed a 1.7 percent dip in its Home Purchase Sentiment Index (HPSI) – composite index tracking the housing market and consumer sentiment in buying or selling a home – to 80 points for November 2020. According to the research, the decline can be attributed to employment concerns and the economy and buying/selling conditions. It shouldn’t come as a coincidence that consumers are wary at a time when the U.S. is on a steep upward trajectory in daily COVID-19 cases and hospitalizations, and municipalities and states reimpose new restrictions.
Home Purchase Sentiment Index (HPSI) Highlights:
- 2% month-to-month increase of Americans who believe now is a good time to sell
- 3% drop in Americans who say the current housing climate is a buyer’s market
- 8% believe mortgage rates will continue their downward trend in the next 12 months
Is Now the Time to Enter the Housing Market?
Despite the current conditions of COVID-19, optimism is growing the pandemic will end in the second quarter of 2021, as vaccines are trialed, approved and distributed to the population. Until then, uncertainty and risk about the economy and jobs may remain high with consumers, barring any unforeseen circumstances. So, does a prospective home buyer or seller forge ahead with the real estate process or wait it out until the conclusion of the pandemic?
There is a no ‘one-size-fits-all’ answer, as financial situations and housing scenarios will differentiate from one to the other. However, by assessing finances and weighing the pros and cons of buying or selling a house during a pandemic, one should be able to come to a confident decision.
What are the disadvantages of buying a home during the COVID-19 pandemic?
Unless a buyer plans to conduct the entire home buying journey virtually, there will be health risks associated with the experience. From meeting with real estate agents or touring open houses, the probability increases of contracting COVID-19 when an individual is interacting with people outside the household. There are precautions to implement for a safe home buying process: social distance, keep hands clean and sanitized and if under the weather, stay home.
Limited Housing Stock
Typically, the holidays and winter months are the slowest times for real estate. Now, compound the season with a global pandemic and you have quite the predicament. For a home shopper, the upside is this time of year presents less competition from buyers, but on the other hand, you may face a limited housing supply and higher home prices.
What are the benefits of purchasing a home during the COVID-19 pandemic?
Get the Best Deal on a New Home
Houses listed on the market at this present moment may not be around next week. That’s because sellers want to make a move, and quickly. As mentioned above, the economy is unpredictable and so a seller may be more flexible in negotiating and reaching a deal that benefits the buyer.
Avoid Pent-Up Demand Come Spring
By making a move now, you’ll be avoiding what could become a very congested housing frenzy in the spring and summer. As a result, this could push housing prices higher with fewer bargains that buyers could leverage. And so, if you’re on the fence about buying now or later, consider prices may increase significantly in the coming months.
Ready to Move Forward with the Home Buying Process? Union Home Mortgage is Here!
If you’re ready to take the next step towards homeownership, Union Home Mortgage is here to help guide you along the way. Our dedicated and passionate partners provide advice and expertise to ensure you get the best possible mortgage rate for your new home. Let’s talk today about your home buying journey.