Editor’s note: All of HomeLight’s coronavirus information for buyers, sellers, and agents is available on our COVID-19 hub.
The coronavirus pandemic has changed the way we work, learn, and socialize, and it has also raised many questions about how to move forward with our lives.
If you were shopping for — or considering shopping for — a home before the pandemic hit, you may be asking yourself, “Should I buy a house during coronavirus?”
There’s not one answer that works for everyone, so here are some factors to weigh to determine if now is the right time for you to buy.
1. Is real estate an essential service in your area?
In some areas of the country, real estate is considered essential, meaning the work of buying and selling houses can continue in a modified way. In other areas of the country, real estate isn’t considered essential, and home sales aren’t moving forward.
If the latter is the case where you live, then no matter how badly you want to buy a house right now, you simply can’t until prohibitions are lifted. Stay-at-home orders are changing by the day, as is the definition of services deemed essential, so keep track of the situation in your area. Your local Realtor association or your agent can advise you about restrictions locally.
The good news is that if real estate is an essential service where you live, the homebuying process is now more streamlined, says Shanan Steere, a Move Safe-certified agent in Johnson County, Missouri. “The tire-kicking has stopped,” she says.
Before the pandemic, Steere says she would send her buyers listings, and they’d select a number of houses to visit — a time-consuming and often ineffective process. Now, “we are getting online with buyers, making sure they watch the video and 3D tours of the homes they are interested in, and narrowing down the houses to visit to two instead of eight. We’re more focused now.”
That focus is making the homebuying process simpler for house hunters.
“We’re getting very clear on what 80% of their desires are so we don’t waste time looking at houses that only fit 50%.”
2. How are your finances?
It’s no newsflash that we are in tough times economically. The mid-May 2020 unemployment rate is at 14.7%, the highest since the Great Depression, though economists warn that the real figure is actually much higher. If your employment has been impacted by the virus, this probably isn’t the right time for you to buy.
Even if you’ve escaped the economic fallout thus far, it’s important to take a hard, honest look at your financial situation before you buy a home.
Ask yourself these questions:
- How stable is your current company?
- How stable is your industry overall?
- Has your income been impacted, or do you anticipate it might become impacted down the line? What does your liquid savings look like?
- Do you have savings set aside to pay for the down payment and closing costs of your home purchase, in addition to an emergency fund to keep you afloat in the case of lost income?
If you feel confident in your ability to buy a home after answering those questions, then it’s a good sign that you’re ready to buy, pandemic or no pandemic.
If your employment is stable but you’re shopping for a home at the very top of your price range, you might want to consider scaling back. Lenders are imposing mortgage overlays (additional qualification requirements), so if you’re set at shopping at the very top of your approval range, this may not be a good time to buy because it’s possible that overlays may reduce the size of your mortgage preapproval amount. On the other hand, if you can afford to spend more than you plan on spending, the overlays probably will not affect you.
One more thing: If your credit score was at the low end of the approval range before the virus, now might not be the best time for you to buy. Because some lenders have raised their credit score requirements, Steere says that she has had a few buyers who have had to pause their house hunt while they work to raise their credit score.
If that happens to you, Steere says not to worry; it should only take a few months to raise your score 20 or 30 points. “We put our buyers with a good lender that can counsel them on what to pay off or what to pay when to help them raise their score.”
3. How is the local market?
Every market is different, and some markets will be affected by the coronavirus more heavily than others. Some buyers may find great deals in their market right now, while other buyers may find the best deals a few months or a year down the road.
Ashley Lay, a top agent in Winston-Salem, North Carolina, with 15 years of experience, says that the market in her area is still hopping, though the percentage of homes that go under contract and close is lower than it was before the pandemic. That’s because more buyers are losing their jobs before their contracts close. “On our team, about 93% to 94% of our contracts typically close, but since the pandemic, we have dropped to about 80% to 82% of contracts closing.”
In Steere’s market, she says she’s seeing a lot of buyer competition on listings under $275,000, but in the higher price ranges, “it is an amazing time to buy because you’re able to negotiate.”
In those higher ranges, says Steere, “it’s a balanced market,” meaning that buyers have some room to negotiate on price. That means that if you’re a move-up client looking to sell your less-expensive home and buy something in a higher price range “you could have multiple offers on your current home and room to negotiate on your new home, so you’ll be sitting pretty,” says Steere.
4. What’s your lifestyle look like?
The novel coronavirus can be extremely dangerous to those who contract it, so if you’re immunocompromised or someone in your household is, this might not be a good time to buy. Though real estate agents are taking every precaution to protect their clients, you may find it best to stay in your safe and secure environment until progress has been made to treat or prevent the virus.
On the other hand, if you or someone in your household is immunocompromised and you’re renting in an apartment building where you can see staff and residents ignoring social distancing standards — or the cleaning protocol in shared spaces isn’t up to snuff — then you might want to move forward with your plans to buy so you can have more control over your environment.
There may be other reasons why you just can’t wait for the virus to pass before buying. You may have to relocate for a new job, or find you’ve outgrown your current home. “Just because there is a virus, it doesn’t negate the need to buy and sell,” says Lay. “Deaths and marriages and babies and divorces don’t stop.”
5. Can you accommodate delays and upheaval?
This isn’t a normal time to buy a house, and delays are almost inevitable.
It’s harder to shop for a house right now because some sellers, understandably, don’t want to open their homes for private tours. To address those fears, Steere says that her local real estate board has adopted certain rules for operation during the pandemic.
“Our board has mandated that only the people on the contract are allowed to go into houses right now, and children are not allowed inside of the homes because they touch everything,” she says.
Inspections and appraisals have also been impacted by the virus.
Inspections are still happening during the pandemic, says Lay, but the way they are conducted has changed. “Inspectors aren’t allowing anyone in the homes while they work. When the inspection is over, they’ll do a video walk-through with the buyer.”
Steere says that in her market, buyers are finding it harder to schedule an appraisal because appraisers are busy due to so many homeowners refinancing (you can thank those low interest rates for this one.) “Right now, our closing period is 40 to 45 days instead of 30 days because the title companies and appraisers are so backlogged,” she says.
Lay also warns that she’s finding it’s a bit more difficult to get the appraised value of a home. The reason, she believes, is because appraisers are hedging their bets a little bit and being more conservative in their appraisals. “That’s especially true of appraisers that lived through the Great Recession,” she says.
At the end of the day, the virus may have changed the way that we buy homes, but buying during the coronavirus is still completely possible.
“Buyers should feel confident in making the decision to move if that is something that needs to happen in their life during this time,” says Lay. “Realtors are doing everything possible to keep their clients safe. There’s no reason they can’t find the house they need during this time.”
Steere’s sentiment is the same. “People are still buying,” she says. “The market is still moving.”
Header Image Source: (Daniel Frank / Pexels)