Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].
Question from Jordon in Missouri: Hi Brian, This spring, I was planning to buy my first home. I’ve taken the time to understand the process and gone to a lot of work to get my finances in order. Now this dang pandemic has turned everything upside down. I don’t know if this is a good time to be looking for a home to buy or how the process has changed because of the coronavirus. Help!
Answer: Hello Jordon. You’re certainly not alone in being confused about trying to buy a home during these difficult times. The reality of it is that the residential markets are looking different depending on the state, city, and local area you are looking to buy in. Let’s look at the situation from a broad point of view that includes as many local situations as is practical right now. It’s a complex situation that’s changing not just by the week or even the day, it’s changing by the hour. Jordon, you’re going to need plenty of resilience, flexibility, and the ability to deal with frustration as things change frequently.
Here is one broad-based fact, as of March 28 the Department of Homeland Security classified residential real estate as an “essential business.” Almost every state is allowing at least some real estate services (at the time of this writing only Michigan and Vermont were not allowing any real estate services). In most places, you’ll find services available from real estate agents, appraisers, title agents, and other industry professionals.
With interest rates for highly qualified buyers hovering substantially below 3%, you certainly want to be considering buying a home. How you go about it in these perilous times is the key. You may even want to take a close look at a 15-year fixed rate mortgage rather than a traditional 30-year fixed rate mortgage. At today’s super-low interest rates, you might be surprised how affordable the monthly payments on the shorter term mortgages have become. Who doesn’t want to pay less to borrow money and pay the loan off sooner? But first…
Almost certainly, we are already in a recession and we have no idea how severe it could become. One of your primary considerations needs to be how secure your job will be going forward. If you’re confident that you’ll be able to make the mortgage payments as the pandemic plays out, then this looks to be a good time to pull the trigger to close on your home purchase.
On the upside for those still looking to buy a home, a mid-March survey by the National Realtors Association found that 48% of real estate agents have noticed a decrease in buyer interest attributable to the coronavirus. Of course, that means competition from other buyers is less. But at the same time, some sellers are taking their houses off the market. The overall effect is still unknown and almost certainly varies at the local level.
The real dilemma is that no one knows what will happen a month from now or six months from now. Prices might go down or there might be a resurgence in active buyers. A lot is going to depend on the direction the economy goes in. However, it is highly likely that interest rates will remain extremely low for many months to come. Now is a good time to shop around for a good rate.
Here are some tips for buyers based on what is known:
Jordon, I hope you find these tips helpful and I’d like to hear from you about how the process worked and what changes you noticed.
As a reader or real estate professional, here’s your chance to help people understand what to expect during these unique and challenging times? Please leave your comments.
Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].