Is Now a Good or Terrible Time to Buy a Home?
Q: I’m a first-time buyer looking for a single family home. But now I’m not sure what to do. Interest rates are low, which is good, but the coronavirus pandemic is terrifying and the stock market is plummeting. Could now possibly be a good time to buy? What should I do?
A: The coronavirus pandemic has sent the stock market tumbling and left Americans wondering how to handle basic needs, like getting work done and even finding toilet paper. The housing market has been no exception. Agents are responding to anxious sellers and quickly evolving regulations, are making most open houses by appointment only. Many are trying to transition to virtual tours online.
“We’re at peak uncertainty,” said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants in Manhattan. “There are layers and layers of things that home-buying consumers have to process.”
In California, Gov. Newsom ordered all nonessential businesses to cease operations across the state, making it significantly harder to complete a purchase. Some real estate professionals are aiming to make it possible using electronic notarizing and document signing, though steps like appraisals and inspections may further complicate the process.
Depending on your appetite for risk, the coming months might actually prove to be a better market for first-time buyers than for other buyers, partly because you don’t have to worry about trying to sell a home in uncertain times. And list prices may fall if sellers worry that buyers are dropping out.
Also, the government is slashing interest rates, aiming to keep buyers in the market. Lenders are reporting a spike in mortgage applications — and as of last weekend, people were still making offers on homes. “If interest rates stay at these historic lows or even go lower, people will be pushed off the fence to buy a home,” said Richard Jercha, a home-lending officer at Prime Lending.
But there are other factors that a buyer must consider. The pandemic is not a one-time event that we’ve weathered, but an ongoing, developing situation. Your home closing date could be delayed because someone gets sick or offices close. Your building may impose restrictions on how moving companies operate. “Those with a flexible timeline or who are uncertain may be wise to wait,” said one local economist.
Think of the low interest rates not as a good deal, but as a cushion to soften the blow of any unexpected inconveniences. Decide whether you’re willing to live with the uncertainty of complications that may arise, and build contingencies into your plan. Ask the moving company how they’ll handle delays. Talk to your landlord about what would happen if you needed to extend your lease because your closing date was delayed.
If you’re not ready to tackle these kinds of questions, then pause and wait. The housing market will still be here when you’re ready to jump into it.