If you’re familiar with real estate trends, you probably know how important the spring season is for home buying. During this time, often referred to as the “home buying season,” many homeowners decide to buy new houses in preparation for the summer and fall.
But as the COVID-19 pandemic hit earlier this year, causing a nationwide shutdown, the spring months did not prove to be a successful time for home buying.
Now that states are starting to open up and Americans are getting a glimpse of the new normal, real estate professionals are beginning to wonder what this means for the home buying season. One of the biggest questions crossing the minds of real estate buyers and sellers is if the home buying season will be extended, and if summer will be the new spring.
Are People Buying Homes?
As previously mentioned, the spring months are historically the most popular time to buy a home. With that being said, let’s take a look at 2020’s real estate trends and determine how they’ve been affected by the COVID-19 pandemic.
The year 2020 started off with a record-breaking surge in mortgage applications, as well as many buyers eager to begin house hunting in February and March. While it seemed like the home buying season was kicking off early, the second half of March was impacted by statewide shutdowns and social distancing rules. This caused many open houses to get cancelled and left real estate professionals without jobs.
After months of living in these conditions, states are slowly starting to open up and Americans are beginning to wonder what is in store for the future of home buying. For many people, COVID-19 hasn’t impacted their desires to buy or sell their house. But for other home buyers and sellers, COVID-19 is causing them to rethink their initial plans. Let’s learn more about buying a home during the COVID-19 pandemic, and see how doing so will impact the rest of the buying season and the summer.
Buying A Home During COVID-19
Clearly COVID-19 has had a significant impact on nearly everyone’s daily lives, as well as on the government and the economy. It has also largely influenced the home buying and selling processes, and affected the nation’s real estate trends for the remainder of 2020.
When the pandemic first hit the United States, business was slowing down, but now matters are finally starting to pick back up and reopen. If you’re thinking of buying or selling a home during COVID-19, it’s important to be aware of what might be in store for you.
First, you should know that home prices are rising, despite the pandemic. This is a result of low interest rates and a limited number of choices for home buyers to look at. In addition, the demand for buying a home is increasing, as many homeowners were stuck inside during the stay at home orders.
Although home prices were rising slowly during the early months of the pandemic, real estate professionals expect these prices to continue to grow more steadily as things go back to normal.
As home prices rise, mortgage interest rates are continuing to fall. Though interest rates aren’t expected to hit historic lows, they will continue to stay low until the economy returns to normal. In the meantime, buyers will be more motivated to buy a home now and receive a lower interest rate. And one of the largest demographics looking to buy homes at this time is millennials.
Now, let’s take a look at how these real estate trends will affect the buyer’s and seller’s markets.
When it comes to the buyer’s market being affected by COVID-19, some potential buyers will want to go through with a new purchase, while others may want to delay it. However, now that more businesses are opened up, buyers have more freedom to visit open houses and work with real estate professionals. At the same time, many buyers may have experienced layoffs from work and other financial hardships that would make it difficult to buy a home given the current economic climate.
Especially with the rise of home prices, buyers might be wary of purchasing a new home at this time. But if a potential buyer is still hoping to move, it’s important they know how much they can afford and they stick to that budget. It can be helpful for home buyers to consult or work with a buyer’s agent who can help them find a home for the best price possible.
Because mortgage interest rates are low, buyers might also be more interested in buying a house now because they could qualify for better loan terms. However, if they qualify for a mortgage, buyers might have a more limited selection of housing options within their price range. It is also likely that they will have little competition.
Either way, the buyer’s market is expected to significantly pick up for the remainder of the summer.
According to Realtor.com, the top buyers markets before the COVID-19 pandemic hit were Pittsburgh, Rochester, Minneapolis, San Francisco and Tampa. Despite COVID-19, these cities are still very popular for home buyers.
After months stuck inside during quarantine, many potential sellers have realized that it’s time to move out of their houses. So, as businesses have opened back up, the seller’s market has also been picking up. Still, however, many sellers are continuing to wait until the market amps up even more to avoid cutting their prices.
Currently as home prices rise, many sellers may benefit by making a nice profit. Sellers should also make sure that they’re aware of their competition and settle on the right offer. With interest rates at lows, sellers should also prepare to have their homes on the market for a little longer than they would have hoped for.
According to Realtor.com, the best market for sellers pre-COVID-19 was Colorado Springs, Colorado. Other popular seller’s markets that have stayed strong are Phoenix, Salt Lake City, San Diego, Riverside and Baltimore.
Although 2020 has already proven to be an abnormal year for home buyers and real estate professionals alike, it looks like the home buying season will continue to pick back up. In the meantime, check out our other resources for real estate agents!
Source: Home Loans