For those who need to buy or sell real estate during COVID-19, this question might be haunting you. For those who don’t, you might be wondering if there’s something to be gained (or avoided in the future) by acting now. Although “uncertainty” has been the most popular word in this season, we put together a 4 step guide to help you weigh your options.
Weekly market data is showing price drops that could be related to the pandemic. The first half of March showed year-over-year price growth; the second half did too, but much slower. This could be an early market response, but if it continues, we might see further price drops in April. How much? What we know is that normally, March/April is by far the busiest season in the real estate market, and this year’s data initially showed even more activity than the last 3 years. So whether it will be significant enough to be lower than previous years is yet to be determined.
What’s also worth noting is that originally, new listings were increasing with year-over-year data; after the shutdowns hit, April newly listed properties decreased by 31% compared to last year. That means much lower inventory, which keeps prices stable; but this impact will relate to buyer demand, which unfortunately, has been slowing as well due to low sentiment.
For buyers, your interest rate could end up even more important than the price long run - just one percent can save you tens of thousands of dollars over time! The current rate is hovering around 3.5% for a 30-year loan, having dropped as low as 3.3% this month. For some perspective, rates were hovering around 4.3% at this time last year. If you need to buy, this could really be a good time to lock in a great rate. For sellers, keep in mind that the lower the rates, the more buyers can afford to pay for a home.
Can I even tour, negotiate and close on a home during this time? Yes, you can. Under Illinois’ Shelter in Place order exceptions, Banks, real estate services, title companies all remain open and are working hard to navigate municipal and county closures. With some adjustments, closings have been happening as normally as possible. Virtual home tours help your social distancing efforts, online signatures and all the rest make it possible to buy and sell your property. Let the industry professionals handle the hard part for you - if you need or want to buy or sell, we make it happen.
In the end, it all comes down to what makes the buyer and seller comfortable. Aside from the math and possibilities, if health and safety is on your mind more than good rates or beating price drops - perhaps that will be the deciding factor for you. In the long run, whatever gives you peace of mind is the best route. The truth is that these times are extremely uncertain for the entire country. What we predict can change. Considering your current situation, your future, mortgage rates, and price trends, it’s important to take all of that into account, but also include your peace of mind and well being, and do what makes the most sense for you.
If you need to talk to someone to walk through your best choice, ask an arhome agent. We're here to hep.
Author: Joanna Sokolowski Sources realtor.com - Javier Vivas, Director of Economic Reasearch / Nerdwallet.com - Current Interest Rates