Should I Buy a House During the Coronavirus Crisis?
By Alyse Wolfard | April 27, 2020
The warm weather of Spring typically signals the beginning of the home buying season. But because of the coronavirus pandemic, this Spring is anything but typical. Even so, people are still buying houses safely by finding creative ways to follow social distancing recommendations. Everyone’s situation is different, and ultimately only you can decide your best course of action. But if you’re wondering, “Should I buy a house now during this health crisis or wait?” here’s some information you may want to consider.
Are you ready to buy a home?
Home affordability: In the best of times it’s important to accurately calculate how much home you can afford. It’s doubly important now. Some experts recommend a monthly mortgage payment that’s no more than 25% of your monthly take-home pay. If income stability is a concern, you may want to consider buying under budget or at least holding off on a stretch purchase.
Mortgage pre-approval: If you’re financing your home purchase, get preapproved for a mortgage before looking for your house. Your Realtor should be able to suggest a loan officer who is set up to work remotely. You can then interview them over the phone or through video chat to make sure all paperwork can be done online, through email or postal mail. Mortgage rates are fluctuating, so shop around and compare offers.
What factors in the current real estate market should you consider?
Rapidly changing market: The real estate market is changing rapidly. Although showings dropped in March and the first half of April, data from the national service ShowingTime points to an upswing in home showings, most likely due to Realtors using technology to conduct business safely. According to the National Association of Realtors, 74% of agents surveyed said their clients have not reduced listing prices to attract buyers. Analysts predict a strong real estate rebound once social distancing restrictions are lifted. Housing inventory was low nationwide pre-pandemic – home prices could be pushed higher if there are a lot more buyers than there are houses for sale.
Lower mortgage rates: Mortgage interest rates remain low, which is good if you need to finance your home purchase. However because so many people are refinancing, the rates are going up quickly. Waiting too long may mean missing out on the opportunity to secure a low mortgage rate.
Sales may take longer: Because situations change rapidly due to COVID-19, buyers are asking for more contingencies on their offers, such as longer home inspection windows. Mortgage pre-approval might take longer because of changing financial circumstances. Repairs may take longer to complete. But because everyone is in the same situation, buyers and sellers are less concerned about the number of days a listing is on the market before selling.
Economic uncertainty: No one is certain about the ultimate impact the coronavirus restrictions will have on the real estate market. Will listing prices drop, remain steady, or climb higher? Your Realtor is a good source for information on the current real estate market in the area where you want to purchase your home.
How can a Realtor help you buy a house safely?
Real estate is an essential business according to the U.S. Department of Homeland Security. Safety is everyone’s #1 priority and the real estate industry is adapting. The National Association of Realtors released guidelines for showings to help keep everyone safe, in addition to any local guidelines.
Your Realtor should have the knowledge, tools, and expertise to help you buy your perfect property as safely as possible from showing to closing. Here are some of the ways your Realtor and associated professional services can help you buy a house safely:
Increased use of technology: Realtors and related professionals are using technology more than ever from start to finish of your real estate transaction. Video conferencing allows face-to-face virtual consultations and meetings. Listings are being showcased online in more sophisticated ways. Documents and contracts can be signed through secured email. Your Realtor should be familiar with the digital technologies to show you houses you’re interested in and answer your questions about them.
Virtual Showings: More buyers are making an offer without physically seeing the house. Listings can be showcased through interactive, 3-D pictures, floorplans, and virtual tours to see the outside of the home and inside room-by-room. Realtors can host a live virtual home tour or walk-through using tools such as Facebook Live or FaceTime so you can ask questions in real time and explore specific areas.
Modified in-person showings: Where allowed, in-person showings are still being held with safety precautions such as social distancing and limiting the number of guests per showing. Many Realtors are conducting showings for serious, pre-qualified buyers only. You may be required to wash or sanitize your hands before entering a home, to wear a mask, and to either take off your shoes or wear shoe coverings. During the tour, it’s now customary for the listing agent to open all the doors and turn on all the lights so you can explore closets and other enclosed spaces without touching anything.
Remote home inspections: A certified home inspector may examine the house alone and take a lot of pictures and take videos of issues. The inspector can then email you the report and call or videoconference to go over findings and answer questions. Inspectors should wear gloves and a mask, wash their hands before entering and after leaving the house, and sanitize anything they touch.
Virtual home appraisals: Some parts of the country do not allow virtual home appraisals. But where allowed, virtual appraisals can be done via video as well as desktop appraising, which is done by reviewing available public and private data and then using comparable properties for the reports.
Final walk-through: Your Realtor may conduct the final walkthrough of the property via live video. Or, they can open the home and turn on all the lights and open all the doors so you can walk through on your own. When you’re finished your Realtor will lock up the home.
Remote home closings: A growing number of states, such as North Carolina, provide 100% remote digital e-closings (including remote notarization) where you won’t have to be present at the closing table. This is the safest option. If you’re in a state that requires in-person closings there are ways for you to close on your home while maintaining social distancing. Buyers and sellers may meet in separate rooms to sign closing documents. Everyone involved in the closing can drive to one location, stay in their cars, and use their own pens to sign documents delivered by a gloved and masked intermediary. If the state requires an attorney must be present at closing, buyers can pre-sign documents and give their lawyer power of attorney to complete the closing on their behalf. In some cases, documents are being notarized via a drive-thru where a notary watches the buyer through a window.
Should you buy a house now?
Realtors are still helping buyers find and close on home purchases. They are finding workable, creative, and safe solutions to the challenges posed by the coronavirus pandemic. Speak with a trusted, reputable Realtor for more in-depth information about the local real estate market where you want to buy your home. Do your own research. Calculate your budget, and carefully weigh all the factors. If your income is stable, you’re ready to buy, and social distancing has made you realize you don’t love your current home, it might be a good time to consider buying. But in the end, only you can decide the answer to this question based on your specific needs and situation.