With social distancing being an important aspect of life at the moment and so many parts of the economy suffering the effects of state lockdowns, some are worried about how all of this will affect the housing market.
This is more than ever a concern for those who were hoping to purchase a new home and have seen their plans potentially derailed by the pandemic. Is this a good time to think out buying a new home, assuming that it is even safe to do so?
Now depending on where you live, the answer may be quite shocking!
It’s a Buyer’s Market in Some Markets (but not everywhere)
With the current state of the world, the demand for real estate has dropped significantly in some parts of the US and Canada. This has left many of those who have already listed homes for sale or that have been planning to list over the summer in a position where there are far fewer people looking at their properties.
For some sellers, this isn’t much of an issue; they can simply wait it out and stick to their previous plans. A lot of sellers don’t have that luxury, though. This creates a buyer’s market where a great deal of sellers are prepared to consider offers that they wouldn’t have in the past, giving potential buyers a lot more control in the home-buying process.
As the name suggests, it’s always good to purchase in a buyer’s market. It isn’t necessarily a great time to list a home for sale, of course, since you have to settle for a lower offer than you’re probably expecting if you want to move the property. This usually helps to balance out the market, with listing rates slowing down to meet demand until things pick back up again.
With all of that said, not every market is experiencing this pandemic the same way. In fact, many markets remain a seller’s market due to reduced inventory, mortgage rates, or any number of other local demand characteristics.
Demand Is Staying Low in Most Real Estate Markets
A majority of the time, a buyer’s market is caused by shifts in the market that have people trying to save money; an example of this would be an economic recession. Most of the time, these financial shifts temporarily decrease the number of people that are willing to take on large debts, creating a glut of sellers trying to entice a smaller pool of buyers. The buyer’s market typically fizzles out once the number of sellers shrinks or the market stabilizes.
From the current buyer’s market, the economy certainly plays a HUGE factor. There is an external factor at play here as well, however: The physical distancing that COVID-19 requires has unfortunately added additional worry about open houses and other forms of interpersonal contact that are traditional when buying or selling a house.
There’s still a large amount of uncertainty surrounding the pandemic, including how long it will last, so with this external factor and the currently stunted economy we could see demand stay low for longer than you would expect in a buyer’s market situation.
This isn’t to say that the market won’t recover, of course. Some states have already started reopening non-essential businesses and other parts of the market, and other states have plans to start reopening soon. The economy will likely stay sluggish for a while, but reopening is the first part of recovery.
Even the pandemic is becoming something less of a factor as individuals continue to practice social caution and science continues to work toward treatment and vaccine choices. While market recovery may take longer than in the past, a recovery will happen, and the good deals that buyers can find now will become less common as things move forward.
If you do choose to shop for a home in the current market, be certain that you’re smart about it and stay safe. Maintain all physical distancing practices while looking at homes, even if there is only a seller or agent present.
Ask whether no-contact options such as virtual tours or virtual closing with digital signage are alternative options, and if touring the property request that any doors or other barriers be opened prior to arriving to help decrease contact. Make sure to also wear a mask, bring hand sanitizer and take the same precautions that you would in any other social situation.
This may seem a bit excessive for seeing a home, but do keep in mind that these practices not only protect you, but also protect the seller and agent at the same time.