If you’ve been able to escape the worst of the coronavirus pandemic’s economic fallout, you may be in a position to take advantage of the hottest housing market in years. At least if you’re a seller.
You might think with so many people sheltering in their homes, housing sales would be flat. BILLSHARK has found just the opposite is true. With more pandemic precautions in place, including virtual tours, remote settlements and electronic signatures, home sales are booming.
“It’s insane,” Pennsylvania Realtor James Dietsche told The Washington Post recently.
In just one example, he told of a 1950’s style, three-bedroom home he’d listed for $200,000 outside Harrisburg. It received 26 offers the first weekend it was available, with buyers coming from as far away as New York City and Washington, D.C. One person even offered $50,000 (that’s not a typo) above asking price. Others were willing to buy without an inspection.
One of the main reasons for the frenzy in sales is historically low interest rates. In July, the 30-year fixed rate on mortgages fell below three percent, its lowest level since mortgage investor Freddie Mac began tracking mortgage rates in 1971.
Another, ironically, is the pandemic. People are slowly beginning to adjust to the new normal of working at home and spending more time there.
This, in turn, is also driving demand for new-construction homes. They allow buyers to incorporate features like a home office, a large yard or a playroom for the kids.
“New home demand is improving in lower-density markets, including small metro areas, rural markets, and large metro exurbs, as people seek out larger homes and anticipate more flexibility for telework in the years ahead,” said Robert Deitz, chief economist at the National Association of Home Builders (NAHB), in a new report. “Flight to the suburbs is real.”
Which is a likely third driver: Some see crowded cities as more likely to spread the novel coronavirus, so anything that allows families some “elbow room” is in demand.
“People are literally trying to get back to a house in the suburbs with a yard and a fence,” said Dietsche. “Those are the houses that are blown off the market in two seconds.”
Nationwide figures back him up. According to Realtor.com, median home prices have shot up 9.1 percent year-over-year in the week ending on July 18. The number of homes for sale, however, is down 33 percent compared with the previous year, which even then was during a housing shortage.
What about buying?
If you’re interested in buying a house at this particular time, the example cited above should give you pause. It’s likely to be a struggle to find what you want at your price, and you may have to settle for far less than you’d hoped.
Even if you want to buy new construction, you may face similar obstacles. Due to the surge in demand for new homes combined with the pandemic, all these factors are impacting construction costs, from lumber to land to labor expenses, according to MarketWatch.com. All of which could likely influence home prices to rise and delay construction on your new home.
“Builders are seeing strong traffic and lots of interest in new construction as existing home inventory remains lean,” said the NAHB report.
On the other hand, interest rates may not go much lower, while home prices may continue to rise, depending on economic conditions. So you have to decide whether buying now is a risk you’re willing to take.
If you do want to buy now, here’s what the experts advise:
- Know what you must have vs. what you want. This includes not only number of bedrooms and baths, but location.
- Find a realtor who can clue you in to properties as soon as they become available, or even before. Take her word about what you can expect to buy for your budget. Make sure she knows what type of house you’re looking for and what features or deficits are deal breakers.
- Be sure your finances are in order. You’ll need a 20 percent down payment, unless you’re a first-time buyer or a veteran. In that case, you may qualify for a low- or no-down payment loan. You’ll also need proof you have the down payment available.
- You’ll need to be pre-qualified for a loan. Consider that amount to be the upper limit of any offer you make. The more cash you can afford as a deposit, the more likely a seller will take your offer seriously.
- Be flexible about contingencies. You should have an inspection, but think of waiving any others. The easier you make it on the seller, the more likely they are to accept your offer.
- Be patient. Try not to fall in love with a property and realize it could take several months in the current housing market to successfully buy a house. If you must move immediately, you should consider renting for a time.
If you’re tired of paying more than you need to for your phone, Internet, satellite, and other bills, let BILLSHARK fight your battles for you. It costs you nothing to have us review your bills and contact the providers to find you hidden savings.