Five Expert Tips on Buying a House During the Pandemic
Pandemics, amongst other natural disasters, have a terrible effect on different industries and markets. The Covid-19 pandemic is no exception, as this global pandemic is leaving a lot of teeth-gnashing, regrets, and financial problems in its wake. This is except for the telecommunications industry, which has not surprisingly been experiencing a surge. Many people rely on telecommunication to carry out their businesses, such as meetings, conferences, conventions, and the rest.
Aside from the telecommunications industry and necessary supplies brands, every other sector has a bad story to tell about the pandemic. Amongst the diverse industries and markets that got hit badly by the waves of the Covid-19 pandemic is the real estate market. Talking about demands and supply of properties, rates, and values of properties, cost estimates, and sales operations, the effects of Covid-19 cuts across every aspect of the real estate market.
Let’s walk through some of the significant effects that Covid-19 has on the real estate market.
How COVID-19 has affected the real estate market
1. No more physical tours and inspections of homes
Seeing is believing, the saying goes, and everyone understands the need for potential home property buyers or renters to do a physical tour of the property that they are going for before closing on the deal.
But with the coronavirus pandemic, security measures that promote social distancing and forbid close human physical interactions, many prospective homebuyers or renters have been subjected to checking their prospective properties digitally.
And compared to a physical tour, a virtual tour doesn’t do justice to a property tour for a homebuyer. Hence a lot of prospective property buyers or renters get disinterested in pursuing properties.
Hence, this brings about a low turnout in property rental and sales.
2. Tight inventory
As a result of the Covid-19 virus pandemic, the housing market inventory has become tighter, as listings are being delayed.
With the delay in the listing, there are fewer buyers and more sellers in the market. With the high rate of supply and low rate of buyers, the real estate market is experiencing low sales, which affects home prices, mortgage rates, and promotes low-interest rates.
3. Turndown in rentals
With Covid-19 forcefully locking everyone in their homes and countries, rental properties that usually experience a surge resulting from tourist visits, international conferences, holiday visits, and workshops have recorded a huge downturn.
For hotels, beds and breakfasts, and inns, patronage is very low as people can’t leave their apartments not to talk of their countries because of the COVID-19 travel restrictions.
4. Reduction in the importation of Building Supplies
It is no longer news that China is the root of the Covid-19 virus spread. Coincidentally, China is also the home of most building supplies.
With the restrictions placed on the importation, we have seen a drastic drop in the number of building materials imported. Many homebuilders cannot build new properties or finish with ongoing building projects in the world.
Invariably, this causes a major drop in the number of properties in the market.
With the Coronavirus hitting the economy on all sides, many brands and organizations have no choice but to let go of their staff.
With about 15 percent of workers out of jobs, many homeowners see foreclosures in their future as a result of a default in rents and mortgages. Some prospective buyers are also ditching the idea of property buying a home and focusing on more pressing matters.
It is vital to note that regardless of the negative influences of the Covid-19 virus spread, there are a few positive effects on the real estate market. Some of which are;
6. Government bailouts
For one, some developed countries’ federal government is giving our reliefs and bailouts to homeowners and mortgage lenders. For instance, in the United States of America, the government has issued a moratorium on evictions for federal subsidized properties.
7. Mortgage rates
Another way the government is helping boost the real estate market is through its emergency interest rate reduction.
This reduction has the interest rates dropped to 1-1.25% regardless of credit score, causing first-time property buyers to quickly lock in their rates and also be able to afford their dream properties.
Tips on buying a House during the pandemic
Based on the foregoing, buying a home during the pandemic seems like a terrible idea, yeah? Of course, it does. But looking at it from the point of view of a good investor, you will see that buying properties during the pandemic is a wise investment move, as it is an opportunity for you to buy good properties at a low mortgage rate with no debt.
Also, investing in the real estate market during the pandemic will give you access to many top-notch properties without having to compete with other buyers or renters. However, as a home buyer, before you get excited about this news, here are a few tips to guide you through buying properties during the pandemic.
1. Be sure that you need to buy a house
Gone are the days when buying properties was cool and unique. With the rate and debt to income ratio that the real estate market is going through, you have to think twice before investing your money into the business.
Hence, you have to think this through and make sure that it’s time to buy a home, and your reason is genuine.
2. Base your search on needs and wants
When you base your search on what you need and not what you want, it helps you narrow your search with your real estate agent to a few options. Hence, you won’t have to talk to a lot of home sellers, and you won’t be subjected to unnecessary property tours. Another piece of advice is that you avoid splurging on any new home right now. Whatever property you are proposing to buy, kindly make sure that the home’s cost doesn’t drain your bank accounts. Go for something less expensive or low in demand and take out home loans, so you can have a little cash to fall back on.
3. Don’t bite more mortgage than you can chew
It may be true that mortgage rates have been reduced, but you mustn’t sign an exorbitant mortgage loan that will require your head when it’s time to pay. Go for an affordable and low demand mortgage loan that you will be able to pay up without stress or sweat.
4. Be on the lookout for properties that have a warranty
Just like an item or object that has been on the shelf in a store for a long time, there is every possibility that that item or object would start depreciating in service and value. The same also goes for properties. Most of the properties listed for sales or rent have been there for a long time, and there is a possibility that these properties have started undergoing some wear and tear. Talk to your real estate agent and get this sorted out before you buy a house. To avoid getting yourself catfished into spending extra bucks on repairs in the house while home buying, endeavor to get a place with a warranty so that if you move into the property, you won’t be liable for any damages for a period.
5. Make sure your digital tour is detailed
Another tip that will help you secure the best property during this period is to make sure that the agent or homeowner (anyone you’re dealing with directly) gives you a detailed virtual tour of the properties. Let them show you everything; shape, doors, windows, power lines, roofing, walls and floors, electrical installation, water installation and lines, etc.; everything and anything you need to see. Ensure you view the tour meticulously and don’t just settle on their word.
Bonus Tip: Start your search early
As a bonus, this tip is crucial. One thing you don’t want to do is procrastinate your purchase process. Once you have made up your mind and have considered the financial aspects (whether you need a home loan or not), the next thing you should do is contact either the agent or owner immediately to set up down payments to avoid missing out. Nothing stays the same in the real estate market, as anything can happen at any time. Therefore, you shouldn’t be caught unaware that you commence the process and immediately set up a down payment.
The real estate market is going through a lot due to the pandemic, but this is not an excuse not to buy or set up your down payment at least. If there are available listings and the financial backing to buy the property, start the registration process, get partner offers if you have to, and lock in on a property. But, before you make any purchase, kindly speak to your expert real estate company and ensure that you understand the tips shared above and put it to good use.
Article by guest writer: David Smith, No Made Villa