The springtime housing market started off strong this year, but the current pandemic is raising some questions as to what kind of housing market shift can we expect to see in the coming months. Although the jury is still out on what is to come, let’s take a closer look at what experts are saying. Is it time to buy, sell or hold on a home?
The Current Housing Market
According to CNBC, the housing inventory leading into 2020 was already a little lower than previous years, but still fairly robust. However, after many states issued “stay at home” orders, new listings have begun to rapidly taper off.
In fact, Capital Economics predicts home sales could decrease by 35% annually this spring (as compared with the last quarter of 2019) due to state-wide self-isolation orders and increasing levels of unemployment nationally.
So, does this indicate that we should worry about the coming housing market shift?
Why The Housing Market May Not Be as Dismal as 2008
It’s difficult to forget the economic crash of 2008 and the impact it had on the housing market for many years. However, there are some major differences between then and now.
- Increased government regulation has produced more rigorous guidelines for mortgage loan approval. In 2008, creative financing options were more likely to be found, with individuals qualifying for mortgages beyond their financial means.
- With an uptick in qualified buyers due to said regulations, home foreclosures and mortgage loan defaults have decreased over the past decade. This alone has contributed to more stability and growth in the housing market over the years.
Future Housing Marketing Challenges
While it doesn’t look like we are heading for any kind of housing market bubble burst, there are still some challenges ahead.
Housing Market Shift Due to Limited Movement
While the market itself seems like it won’t take a massive hit like before, there are some real challenges with the currents state of affairs.
Multi-statewide stay-at-home orders are already providing to be a challenge for buyers and sellers alike.
As of March 20th in PA, agents were no longer allowed to conduct business and were classified as nonessential. Some are still “showing” their previous listings via virtual tours and encouraging buyer offers contingent upon future in-home tours.
For states that haven’t experienced a complete hold on business, many are still offering a similar solutions, or merely enforcing social distancing guidelines for home tours.
According to the National Association of Realtor’s survey of its members, almost 90% said the pandemic has reduced home buyer interest. Sixty percent of those surveyed are simply delaying purchasing for a couple of months. Almost two-thirds of buyers expect lower home prices moving forward.
So what should YOU do during this current housing market?
Buyers in this Housing Market
If you were already planning on purchasing a home this year, don’t table the idea just yet. Mortgage rates are still low at the moment due in part to the federal reserves rate drop on March 15th. This action by the FR is essentially designed to stimulate the economy and encourage consumer confidence in buying.
In addition, Fannie Mae projects that home sales will fall by nearly 15% in 2020. So while that means there were be less inventory to choose from, it’s more likely that you could find a better deal. Many buyers will have been sitting on their listings for a few months and eager to unload the property.
As a buyer, the lower rates combined with motivated sellers may be just the housing market opportunity shift you’ve been waiting for.
Sellers in this Housing Market
This year started off strong for those planning to sell their home. However, many challenges arose once the shut down orders started rolling out.
For those fortunate enough to have creative realtors, virtual tours and the encouragement to consider contingent offers has kept many sellers in the game. Some states are even loosening some regulatory restrictions and allowing required inspections and appraisals to be done virtually.
Economist Jeff Tucker, who works with Zillow said:
“We’ve heard of inspectors checking out a house for a buyer via a video tour, through FaceTime or Skype.”
In addition, Tucker noted that closing and mortgage paperwork are being processed via mail or via online methods.
“As a seller now, the downside is that you’ll probably see fewer buyers,” Tucker said. “But you’ll have less competition from other sellers.”
For those trying survive a new purchase along with an unsold home
Some mortgage companies are allowing a delay in payments during this time, and that may buy just enough time for those caught in the middle of balancing two mortgages to breathe a little.
However, you will still owe the payment as a lump sum after the delayed time period has passed. Also, not all mortgage providers are offering this option. You will need to call your lender to decide if this is the right option for you.
Is there someone you know between housing right now? Maybe consider renting out your home for a short time to help offset the cost of covering two housing payments.
For those in a position who NEED to sell, there is the option of turning to iBuyers.
This organization states that you will receive “quick offers, easy closings, a sales price you’ll be happy with and have no need to prep your house.”
You can even plug in your address to get an estimate. Out of curiosity, I plugged in my previous address and was quoted about $15k less than the offer we received from a traditional buyer.
Although that’s a bit of a chunk, you have the advantage of:
- less hassle,
- no need to wait for buyer loan approval,
- no need to do upgrades and repairs, and
- all with the promise of a quick and easy closing.
In fact, we paid over half of that in realtor and closing fees anyway. So, iBuyer could be a definite option to consider if you are truly in a difficult place right now.
Those That Are Staying Put
Finally, maybe you are among the group of those just waiting to see how it all plays out. Quite honestly, you probably aren’t going to miss out on too much as the housing market prepares for a shift.
While there will be deals to be had and low mortgage rates available, the slim pickings on property options may not appeal to you. There is certainly no harm in continuing to build equity in your current home. Or continuing to save and invest if you can.
There is a good chance that home values will drop in the coming months while the world adjusts to a “new normal.”
If this happens, you may need to stay put longer than you had anticipated. It’s good to decide now if you can see yourself staying where you are for the next several years with all the housing market uncertainties. Maybe that’s the best or only option for you right now, and that’s okay.
So where are you at in the buying, selling or staying process? Were you mid-sale (like me) when everything came to a screeching halt? How is this housing market shift affecting you? Tell us in the comments below!
AUTHOR Kerah Kemmerer
Hello! I'm Kerah. I'm a writer and personal finance enthusiast with a background in marketing. I'm also a wedding and portrait photographer, part-time RVer and a lover of simple and minimal living. Always up to some project or adventure over @krisandkerah on Instagram.