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Is Now a Good Time to Buy or Sell Real Estate?

Deborah Fisher

Independent Insurance Agent Specialising in Medicare

发布日期: 2020年6月16日

Over my forty-one years in real estate, I’ve experienced multiple shifts in the housing market. Some of those shifts occurred locally, and others were on a national scale. Additionally, as the head of marketing for national and regional home builders, and the head of marketing for my own real estate firm, my job was (and still is) to anticipate market conditions and be prepared to shift my real estate sales and marketing strategies for clients.

Now, as a Realtor and part of the Keller Williams Realty team, I’ve been on the forefront of reinventing how I work with buyers and sellers, and quickly launched virtual property showings and virtual seller marketing (listing) strategies to pivot and adapt to the shut-down and COVID19 conditions. In fact, leveraging technology has enabled me to fully meet the needs of today’s home buyers and sellers while they are comfortable sequestered in their home and I in mine.

So, is now a good time to buy or sell real estate? What is the market doing?

Well, traditionally, spring is one of the busiest times of the year for residential real estate. However, the coronavirus outbreak—and subsequent stay-at-home orders—led many buyers and sellers to put their moving plans on hold. In April, the first full month of the nationwide shut down, nationally, new listings fell nearly 45%, and sales volume fell 15% compared to last year.(1) Here in North Texas, things were much brighter in the housing market, and although buyers and sellers were concerned about the risk of infection, we were still averaging a “listing” and a sale a day.

Fortunately, as restrictions have eased, we’ve seen an uptick in market activity nationally, and our local markets stats are still very favourable. (If you would like a market snapshot for your home or neighbourhood, message me privately and I will make that happen.) Economists at Realtor.com expect a rebound in July, August, and September, as fears about the pandemic subside and buyers return to the market with pent-up demand from a lost spring season.(2)

But given safety concerns and the current economic climate, is it prudent to jump back into the real estate market?

Before you decide, it’s important to consider where the housing market is headed, how it could impact your timeline and ability to buy a home, and your own individual needs and circumstances.

WHAT’S AHEAD FOR THE HOUSING MARKET?

The economic aftermath of the coronavirus outbreak has been severe. We’ve seen record unemployment numbers, and economists believe the country is headed toward a recession. But people still need a place to live. What effect will these factors have on the housing market?

Home Values Projected to Remain Stable

Many Americans recall our last recession and assume we will see another drop in home values, but the 2008 real estate market crash was the cause—not the result—of that downturn. In fact, ATTOM Data Solutions analysed real estate prices during the last five recessions and found that home prices actually went up in most cases. Only twice (in 1990 and 2008) did prices fall, and in 1990 it was by less than one percent.(3)

Many economists expect home values to remain relatively steady this time around. And so far, that’s been the case. As of mid-May, the median listing price in the U.S. was up 1.4% from the same period last year.(4)

Demand for Homes Will Exceed Available Supply

There’s been a shortage of affordable homes on the market for years, and the pandemic has further hindered supply. In addition to sellers pulling back, new home starts fell 22% in March.(5) In fact, Fannie Mae doesn’t foresee a return to pre-pandemic construction levels before the end of 2021.(6)

This supply shortage is expected to prop up home prices, despite recessionary pressures. Fannie Mae and the National Association of Realtors predict housing prices will rise slightly this year(7), while Zillow expects them to fall between 2-3%.(8) Still, that would be a far cry from the double-digit declines that occurred during the last recession.(9)

Government Intervention Will Help Stabilize the Market

Policymakers have been quick to pass legislation aimed at preventing a surge in foreclosures like we saw in 2008. The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress gives government-backed mortgage holders who were impacted by the pandemic up to a year of reduced or delayed payments.(10)

The Federal Reserve has also taken measures to help stabilize the housing market, lower borrowing costs, and inject liquidity into the mortgage industry. These steps have led to record-low mortgage rates that should help drive buyer demand and make homeownership more affordable for millions of Americans.(11)

HOW HAS THE REAL ESTATE PROCESS CHANGED?

As the pandemic hit, real estate and mortgage professionals across the country revised their processes to adapt to shifting safety standards and economic realities. While these new ways of conducting business may seem strange at first, keep in mind, military clients, international buyers, and others have utilised many of these methods to buy and sell homes for years. In fact, last year Keller Williams rolled out an entirely new behind-the scenes platform for their agents to use behind the scenes for the benefit of their clients, which industry insiders pointed to as being at least five years ahead of every other real estate company.

New Safety Procedures

The safety of our clients and my team members is our top priority. That’s why we’ve developed a process for buyers and sellers that utilises technology to minimize personal contact and keep everyone safe. (In fact, these new processes are so convenient that I firmly believe it’s the future of real estate sales and marketing!)

As we are marketing properties, for our “listings” - (I really don't like that term because it sounds like putting someone's home on a shelf and hoping it sells, and that's not what my team and I do) - we are holding online open houses, offering virtual viewings and showings, and conducting video tours that walk the buyers through the property just as if they were there in person. We’re also using video chat, my favourite is Zoom, to qualify interested buyers before we book in-person showings. This enables us to promote our “listings” to a large audience while limiting physical foot traffic to only serious buyers.

Likewise, our buyer clients can view properties online and take virtual video tours to minimize the number of homes they step inside. Ready to visit a property in person? We can decrease surface contact by asking the seller to turn on all the lights and open doors and cabinets before your scheduled showing, and I provide latex-free gloves for everyone.

All of our legal documents involved in buying and selling a home have been digital for some time, and today, with some lenders and title companies, we can even close the loan and transfer ownership using digital signatures. You can safely view and eSign contracts and agreements from your smartphone or computer. (This is a great service for those of you abroad or out of state as well, as virtual buying, selling and closings translate to convenience, plus you save travel time and, of course, money.

Longer Timelines and Higher Mortgage Standards

The real estate process is taking a little longer these days. Both buyers and sellers are more cautious when it comes to viewing and showing homes, but once you view a couple of homes virtually, or “list’ your home for sale virtually, and you experience the convenience and see how effective this new process is, you’re likely to find that the whole process is more enjoyable and again, far more convenient. And if there are fewer house hunters and less available inventory, it might take a little more time to match a buyer with the right property.

In a recent survey, 67% of Realtors also reported delays in the closing process. The top reasons were financing and buyer job loss, but, nationally, appraisals and home inspections are also taking more time due to shifting safety protocol.(12) (However, I have had multiple appraisals done in the past few weeks and have not noticed any delays in our local market.)

Securing a mortgage may take longer, too. With forbearance requests rising, lenders are getting increasingly conservative when it comes to issuing new loans. Many are raising their standards—requiring higher credit scores and larger down payments. Prepare for greater scrutiny, and build in some extra time to shop around.(13) (Best place to start? Ask your real estate agent for a couple of recommendations for mortgage professionals in your area.)

IS IT THE RIGHT TIME FOR ME TO MAKE A MOVE?

Forty-one years ago, when I was a rookie real estate agent, my broker told me was that every day is a good day to buy real estate. Interest rates were 17-18%, and still people just like you were buying and selling homes, and somehow in those early years, in spite of ridiculously high interest rates and uncertain economic times, I managed to help hundreds of clients fulfil their real estate goals because people still had a need or desire to buy and sell.

Now that I've sold and closed thousands of homes over my career, the reality is, there’s no “one size fits all” answer as to whether it’s a good time to buy or sell a home because everyone’s circumstance is unique. But now that you know the state of the market and what you can expect as you shop for real estate, consider the following questions:

Why do you want or need to move?

It’s important to consider why you want to move and if your needs may shift over the next year. For example, if you need a larger home for your growing family, your space constraints aren’t likely to go away. In fact, they could be amplified as you spend more time at home.

However, if you’re planning a move to be closer to your office, consider whether your commute could change. Some companies are rethinking their office dynamics and may encourage their employees to work remotely on a permanent basis.

How urgently do you need to complete your move?

If you have a new baby on the way or want to be settled before schools open in the fall, I recommend that you begin aggressively searching as soon as possible. With fewer homes on the market and a lengthier closing process, it’s taking longer than usual for clients to find and purchase a home.

However, if your timeline is flexible, you may be well-positioned to find a good deal in the market. Some areas of the country, and even in certain North Texas markets, we are seeing more sellers willing to negotiate on terms and price; that said, it is still currently a seller’s market here in North Texas due to reduced inventory levels on the market and the current sales pace of those homes. Still, great buying opportunities are always out there, because sellers who are highly motivated to move forward with their plans are generally more open to considering contributions to closing costs or other incentives.

Talk to us about setting up a search so my team and I can keep an eye out for any bargains that pop up. And get pre-qualified for a mortgage now so you’ll be ready to act quickly.

If you’re eager to sell this year, now is the time to begin prepping your home for the market if you haven’t done so already. A second wave of infections is predicted for the winter, which could mean another lockdown.(14) If you wait, you might miss your window of opportunity.

Stay abreast of what's selling in your neighbourhood and in your area. I can set you up to receive monthly neighbourhood snapshots via email that show you exactly what the real estate market is doing in your area. Even if you're not planning to sell any time in the near future, most homeowners find this information is interesting; after all, who doesn't love talking about the values of properties in their neighbourhood, and what's selling?

How long do you plan to stay in your new home?

The U.S. real estate market has enjoyed steady appreciation since 2012, which made it fairly easy for owners and investors to buy and sell properties for a profit in a short period of time. National home values are expected to remain relatively flat over the next year, but some local markets still look attractive. Your best bet is to buy a home you can envision yourself keeping for several years. Fortunately, at today’s rock-bottom mortgage rates, you can lock in a low interest rate and start building equity right away.

Can you meet today’s higher standards for securing a mortgage?

Mortgage lenders are tightening their standards in response to the growing number of mortgage forbearance requests. Many have raised their minimum credit score and down payment requirements for applicants. Even if you’ve been pre-qualified in the past, you should contact a reputable lender to find out if you meet their new, more stringent standards.

Is your income stable?

If there’s a good chance you could lose your job, you may be better off waiting to buy a home. The exception would be if you’re planning to downsize. Moving to a less expensive home could allow you to tap into your home equity or simply cut down on your monthly expenses. If you’re renting and can qualify, buying a home today may still be your best scenario because of low rates and tightening requirements from lenders; homeownership provides many tax advantages, builds equity, and gives you control of the property, not the landlord.

WHEN YOU’RE READY TO MAKE YOUR MOVE—WE’RE HERE TO HELP

While uncertain market conditions may give pause to some buyers and sellers they can actually present an opportunity for those who are willing, able, and motivated to make a move.

Generally, as stated, the average spring season would be flooded with real estate activity. But right now, motivated buyers and sellers are out participating in the market. That means that if you’re looking to buy, you’re in a better position to negotiate a great price. And today’s record-low mortgage rates could give a big boost to your purchasing power. In fact, if you’ve been priced out of the market before, this may be the perfect time to look.

If you’re hoping to sell this year, you’ll have fewer listings to compete against in your neighbourhood and price range. But you’ll want to act quickly. Economists expect a surge of eager buyers to enter the market in July—so you should start prepping your home now.

And keep in mind, a second wave of coronavirus cases could be coming in this winter.(15) Whether you’re buying or selling, ask yourself how you will feel if you have to face another lockdown in your current home.

Let’s schedule a free virtual consultation to discuss your individual needs and circumstances. We can help you assess your options and create a plan that makes you feel both comfortable and confident during these unprecedented times.

The above references an opinion and is for informational purposes only. It is not intended to be financial advice. Consult a financial professional for advice regarding your individual needs.

Sources:

1. Forbes - https://www.forbes.com/sites/ellenparis/2020/05/08/latest-housing-market-update-from-realtorcom/#20bf7829113e

2. HousingWire -

https://www.housingwire.com/articles/realtor-com-housing-market-will-bounce-back-this-year-but-the-rebound-will-be-short-lived/

3. Curbed -

https://www.curbed.com/2019/1/10/18139601/recession-impact-housing-market-interest-rates

4. Realtor.com -

https://www.realtor.com/research/weekly-housing-trends-view-data-week-may-9-2020/

5. Money.com -

https://money.com/coronavirus-real-estate-home-prices/

6. Fannie Mae -

https://www.fanniemae.com/resources/file/research/emma/pdf/Housing_Forecast_051320.pdf