How COVID-19 and the Recession Could Impact New Home Buyers, Investors
If you had plans to find your perfect home this year, the last few months may have made you a little anxious. With COVID-19 and a recession consuming our society and economy, it’s only natural for both investment buyers and first-time homebuyers to have some reservations. It’s also smart to have a few questions regarding these impacts, but you don’t have to spend hours searching for the answers. You can start by reaching out to an experienced real estate team to get the answers you need, but these FAQs and answers may also help.
Are We In a Recession?
This is the question on everyone’s mind right now but it’s an especially important one if you are planning on making such a big financial investment. Unfortunately, the answer to this question is a bit more complex than a simple “yes” or “no.” There are several factors that influence our economy and determine whether we are in a recession, including the GDP, the stock markets, and the housing market. What makes things so confusing right now is that stocks have fluctuated quite a bit over the last few months, with the market gaining a few points in recent days. Still, some experts do indeed believe that COVID-19’s housing market effects have driven us into an official recession. Coupled with a decreased demand for home showings and new construction, this could indicate a significant downturn in the market. The true effects of COVID-19 on the economy and housing market are yet to be seen, so it’s wise to stay updated.
Will Home Loans Be More Difficult to Obtain Now?
If you are thinking about investing in your first real estate property, chances are you will be applying for some sort of financing. The good news is that you may end up snagging a great deal that equates to a lower mortgage payment. That’s because in an effort to shore up the economy, The Federal Reserve has drastically cut interest rates to their lowest point in years, and they plan on keeping them low for some time. Even with interest rates low, PennyMac loans notes that you should still shop around for the right loan. If you are only buying an investment property this year, you will still likely need to take out a conventional loan to fund your purchase, but the interest rates on this loan will be much lower. Unlike FHA loans, which usually have loose credit requirements and flexible down payments, you will also likely need to come up with at least a 20% down payment and meet more stringent credit qualifications.
Will Home Buyers Be Able to View Potential Properties?
If your state is one of the many that are opening back up, you may indeed be able to see potential properties in person. If you plan to visit these properties, you will still want to take the proper precautions to protect yourself. This may include wearing a face covering, which the CDC recommends doing anytime you leave your home. Continuing to practice these safeguards is absolutely crucial since the risk of COVID-19 is still very much alive and well. If you don’t want to wear a mask, or you simply don’t want to take any unnecessary risks, you can also view homes virtually. In fact, most home shoppers are opting for online walkthroughs, video conference open houses, and 3D walkthroughs in light of coronavirus closings and risks. Speaking of closing, drive-thru closings may also be an option if you prefer not to come into contact with other people. So ask your agent about these tools.
The decision to buy or invest in a home should never be taken lightly. So if you feel anxious about doing so with the potential for a recession so high, know that your feelings are valid. Also know that with the right real estate team and the right resources, you may be able to put those worries to rest. With rates so low, now could be the perfect time to invest in or buy real estate.
Photo Credit: Pixabay
Author: Suzie Wilson
