How Does a Global Pandemic Impact the Housing Market?
While COVID-19 has impacted many aspects of life; decisions, opportunities, and milestones, for people around the country, there is one thing some are still working towards in the midst of the pandemic: buying or selling a home. This may come as a shock, but this is the right time to buy and sell. Data, as well as consumer interest, appears to support that notion.
In fact, home buying at the current moment is actually higher now than it was in 2019. According to a Fannie Mae housing survey of 1,000 participants, nearly two-thirds of consumers, 61%, said it was a good time to buy a home in June. Roughly 41% of those respondents said it was a good time to sell. If you are looking to buy or sell, there are factors to consider when buying a house like when to sell your house, housing market interest rates, and the mortgage rate impact on the housing market. No need to fear though, we are here to ease your mind and answer those burning questions.
Does the Economy Affect Mortgage Rates?
Yes, the economy does affect mortgage rates. It’s basically the deciding factor of mortgage rates. Look at it this way, if the economy is strong there is a strong demand for commodities and assets, this includes property. There are more individuals with more buying power, which means there’s a greater demand for real estate. Where there is greater demand there are higher mortgage rates. This is due to the fact that lenders only have a finite amount of money to lend, so, they have to charge higher mortgage interest rates so that they are able to lend more mortgages to more borrowers in the future. On the opposite side of the street, if the economy is taking a turn for the worse (like it began to with COVID), and there is a greater supply than a demand, mortgage rates will be lower.
Should You Buy or Sell Right Now?
This is not easily answered with a “yes” or “no.” We should not expect an “all clear” sign anytime soon. Real estate and the housing market are tricky. It’s not like the stock market that fluctuates daily. It can take time to see depreciation in the market just as it takes time to see appreciation in the market. You might assume that coronavirus impacted all markets as swiftly as it did the stock market, but the housing market has more stability, at least in the short term. After COVID hit, a severe supply shortage propped up housing prices and they appear to be holding steady.
In this unusual market, it’s really dealer’s choice. You can freeze in place and hope the situation improves in the coming months to create more certainty. Or, if you don’t have the luxury to wait, proceed with buying and selling as planned. If you choose to sell, make sure to ask your agent the chances of your house being able to sell. Keep in mind that some properties can fare better than others based on factors such as price point, online presence and marketability, and vacancy or occupancy.
Has COVID Made it a Buyers Market?
COVID has not created a housing market for buyers. As previously mentioned, there was no decrease in housing prices. There has also been a substantial amount of economic instability as people have lost jobs, been furloughed, had to close their business, etc. For those who had a little more stability and were confident in buying, they are met with lower mortgage rates as the supply is higher than the demand. So, it’s really only a buyer’s market for those willing and able to buy.
There are many questions and uncertainty swirling around on buying and selling. Hopefully, you have a little more clarity or guidance. If you are still unsure or have questions, reach out to us at Ivy Data.