There are many things that people are worrying about during this global pandemic. Some are worried about job stability, concerned that their company might end up firing them in a round of layoffs. Others might be worried about elderly family members, or concerned that their industry might not be able to survive this downturn. At the end of the day, however, there are still many investors that are eager to capitalize on the pandemic and believe that they can pick up some premium real estate at the lowest prices in a long time.
Some families might have been planning to purchase a new home for years, and view the coronavirus as a way to have more leverage when it comes to negotiating real estate deals. Others might be a bit more focused in their analysis – trying to find specific cities that might have a buyer’s market more than others. Either way, here are some things to remember if you plan on purchasing a home before the pandemic is over.
The Demand Has Dropped
At the end of the day, you should expect home prices to change somewhat significantly in the short-term. Even if you live in a bustling city, the truth is that the coronavirus has likely affected the local economy significantly. Of course, some businesses were able to get loans in order to pay their employees, and many others may have been financially secure BEFORE the pandemic. Either way, there are less people that are eager to purchase a home.
This means that you might want to put in some lowball offers, because you never know who is eager to offload a home. The pandemic may have slowed plans, and there might be some homeowners who simply want to sell their home, relocate, and move on with their life. There’s nothing wrong with trying to negotiate with a homeowner and seeing how low they are willing to go. It’s a two-way street, however: you might find that homeowners are LISTING less properties, as they wait to see what happens. Either way, you might want to do some research on your own for any real estate investment opportunities nearby.
Home Tours Are Different
If you are the type of person that HAS to see a home in person, that might be trickier these days. More real estate agents are pivoting towards virtual home tours, given the fact that millions of people are socially distancing in order to flatten the coronavirus curve. If you are the kind of investor that simply must view the property in person; you may find that this pandemic doesn’t really have much to offer you.
If you insist, there might be a chance that you can get an in-person home tour, if enough precaution is taken. It’s important to note that you should be as safe as possible for an in-person tour, and you should thank those involved for making it possible. At the end of the day, safety protocol has to come first.
At the end of the day, purchasing a home is a huge commitment. There are specific industries that have been hit hard by the coronavirus, such as the live events industry or even the journalism sector. For example, over 30,000 workers at news companies have either been laid off or furloughed. Some publications have also shut down as a result. Let’s say that you work in this industry – you might want to think twice about spending money on a down payment, when the future of your job might not be as secure as you realize.
It might be best to keep an emergency fund intact so that you can make absolutely sure that you can afford a new home. If you are a single professional with plenty of money at your disposal, this might not be much of a concern. However, if you are a new family trying to figure out a more permanent place to live – you might want to consider ensuring financial stability AFTER the coronavirus pandemic has subsided before making a large purchase of any kind. If you are serious about a home purchase, think long-term: How long do you plan on spending in your new home? Can you easily afford it while also having another emergency fund handy? Do you believe that the home will go up in value over the next few years?
There is no doubt that real estate sales aren’t in a good place, but that doesn’t necessarily mean that it’s the perfect time to buy a home. The housing market might rebound, and you might want to do your own research about the local economy and how much it is affected by the pandemic. You might believe that this is the perfect time to buy your new house, only to find that the new house will still be on the market months from now, and you might be in a better position. You should look at opportunities while recognizing that this might not be the real estate “flash sale” that you believe it is.
The housing market doesn’t respond well to uncertainty, but there are some homebuyers that might find that the market rebounds quicker than they thought. If you have the extra cash to purchase an undervalued property – go for it. Others believe that the housing market’s fundamentals are strong, and that there isn’t much to worry about in terms of long-term home prices. Of course, there will always be analysts and experts that disagree on the market and where it’s headed.
However, if you have been planning a new real estate investment for years, and believe that you HAVE to buy before the pandemic is over – this might not be the right mentality to have. Either way, you should make sure that you do your due diligence as much as possible. If you are big on appraisals, you should understand that many appraisers are doing “drive-by appraisals”, which might not be okay with everyone.