Is now the right time to buy a home?
Buying a home right now may feel like a big gamble, but the current market conditions can actually make buying a smart decision. At the beginning of 2020, real estate was booming, according to neighborhoods.com Regional Sales Manager George Kolar. Typically, the spring season would be a continuation of that trend, but home sales ground down to nearly a halt as the severity of the COVID-19 pandemic became clear.
This is one of the best times to get situated and buy a home that is really a better fit.
But beginning in mid-May, activity began to pick up again across the country. What does today’s market look like, and what does this mean for people who want to buy right now?
Mortgage Interest Rates Are Low
Mortgage rates are at a nearly historic low. “People can lock in a 30-year rate for sometimes as low as 2.75 [percent]. Even a year ago, it was 4 percent,” Kolar says.
With rates this low, buyers have more purchasing power. They can buy a lot more home with their money, or they can opt to keep their budget the same and pay significantly less per month, according to Kolar.
Inventory Is Low
While mortgage rates are low, so is the inventory of available homes. Together, this creates a competitive market.
“Homes come on the market, and if the price is right, they are selling quickly. Oftentimes, they are selling on day one and many times with multiple offers over asking price,” Kolar says. “We are seeing people move twice as fast as they used to.”
We are seeing people move twice as fast as they used to.
While the competition can be intimidating, a good real estate agent will help keep you updated on the options that fit your needs as they come on to the market.
While it seemed like the pandemic would drive down home prices, inventory is low and people still want to buy. “It is the supply and demand that is keeping home prices steady and increasing in some areas,” Kolar says.
People Want to Be Settled
Shelter-in-place orders have resulted in millions of people being cooped up in their homes. Maybe they're not happy with the home itself. Maybe they don’t like the neighborhood.
“People are realizing this is not where they want to be for the next chapter of [their lives],” says Kolar.
In some cases, people are finding the distance from family too difficult, particularly with uncertainty surrounding travel restrictions and the duration of the pandemic.
Kolar has clients who moved to places like Florida, California, and Arizona for retirement deciding to move back to the Midwest or elsewhere because they want to be able to spend time with their children and grandchildren.
How to Buy Safely
“There are a lot of people who are thinking about moving but are letting fear hold them back,” says Kolar. “There are a lot of ways to take precautions and do it in a safe way to still get situated and moved to an area you want to be in.”
The timing may be right, but the pandemic is still a very real concern for sellers and homebuyers. Like so many other industries, real estate and its customers have had to adapt.
- Virtual visits. Many homebuyers are opting to buy homes without seeing it in-person. Real estate agents can use video calls to take prospective buyers through an entire home and answer any questions they have. (Learn how to navigate virtual home tours and more with our The VIrtual Homebuyers Guide.)
- Travel safely. If you're considering buying a home out-of-state, you can opt to drive rather than fly. Kolar has clients who pack coolers of food and spend a day seeing properties before turning around and heading home that same day.
- Exercise reasonable precautions. In-person showings are still an option. Real estate agents and buyers can wear masks and maintain social distance. Sellers are often offering options like booties to put over your shoes and hand sanitizer.
What does the landscape look like from the seller’s side of the table? With inventory so low, the time is ideal for anyone considering selling their home. Over the coming months, so much is unknown. Interest rates could rise, and an influx of foreclosures could enter the market due to the pandemic.
“Homes are selling extremely fast, if they are priced right and they show well,” Kolar says.
Not many people are interested in investing a lot of money in out-of-pocket expenses after purchasing a home. This means sellers may find more luck on the market if they update and repair bigger ticket items. Sellers can then put that cost into the sale price of their home.
“People don’t want to buy your house for, say, $300,000 and then out-of-pocket spend $10,000 on a new furnace,” Kolar says. “But, they will buy your house potentially for $308,000 or $310,000 with that cost rolled in with the mortgage.”
Finding Your Home
While uncertainty and favorable rates are driving a competitive market, you still want to find a home that is right for you. First, consider major factors like the neighborhood in which you want to live. Does it have the amenities and character you want? “The right home in the wrong community is still the wrong home,” Kolar says.
The right home in the wrong community is still the wrong home.
Your home is a culmination of many different factors. “It is not just price, It is not just bedrooms and bathrooms,” Kolar says. Consider what is most important to you during your search.
If you know where you want to move but are unsure of when, there may be no time like the present. “If you are not happy where you are at, this is one of the best times to get situated and buy a home that is really a better fit for the next chapter in your life,” Kolar says.