Buying a House During the Coronavirus Pandemic

Spring is upon us, which typically involves home buyers checking out properties, negotiating, and closing on new places. But with the outbreak, quarantine and economic uncertainties, real estate shoppers are wondering: Should I buy a home now, or wait?

The coronavirus is leading to fewer home buyers searching in the marketplace, as well as some listings being delayed.

Lawrence Yun, chief economist for the National Association of Realtors®.

During the last month, 48% of real estate agents have noticed a decrease in buyer interest attributable to the coronavirus outbreak.

However, nearly an equal number of members (45%) said that they believe lower-than-average rates are tempting buyers to shop around anyway, without any significant overall change in buyer behavior.

For those who are determined to buy a home, there is opportunity out there.

This is the best I have ever seen in my career… Sellers are nervous, there’s excess supply, and interest rates have been hovering at historic lows. You can own a home for less per month than you can rent an equivalent property in most areas.

Ryan Serhant of Nest Seekers and Bravo’s “Million Dollar Listing New York.”

With fewer home buyers out there looking, you have less competition in your way.

Unmotivated and uncommitted buyers have dropped off. Less competition is a huge leg up in this market.

Maggie Wells, a real estate professional in Lexington, KY.

The window of opportunity for buyers won’t stay open wide forever. NAR (National Association of REALTORS®) data shows that there was a housing shortage prior to the outbreak.

The temporary softening of the real estate market will likely be followed by a strong rebound, once the quarantine is lifted. This pent-up demand could eventually push home prices higher. That could mean that the time to strike for bargains is now.

Bottom line, if social distancing has made you realize you don’t love the place where you’re currently spending most of your time, it’s a good time to consider buying.

How the housing industry has adapted to keep buyers safe

Although it’s a scary time to be out and about checking out real estate, it is still possible to do so and stay relatively safe. The industry has rapidly adapted, introducing approaches that minimize exposure to the virus.

For instance, many agents are now working remotely and conducting most of their business virtually.

Buyer and seller consultations have transitioned to virtual meetings with success.

Kate Ziegler, a real estate agent with Arborview Realty in Boston.

While open houses or showings may not be easy to arrange because of quarantine or other safety issues, real estate listings have stepped up to the plate by offering virtual tours.

We can send clients videos of whatever properties they want to see, or we are happy to have our agents FaceTime from a property.

Leslie Turner of in Charleston, SC.

While those who are immunocompromised may want to stay home, if you’re otherwise healthy, it is also still possible to see some homes in person in some parts of the country. You’ll want to take some precautions before you go.

Hand sanitizer at the door has become the norm, as well as shoe covers, even on sunny days..

Ziegler

During the tour, it’s also now customary for the listing agent to open all doors, so that home buyers can explore closets and other enclosed spaces without touching anything as they look.

If you do make an offer that’s accepted and you head to the closing table, real estate agents and attorneys are also adapting to remote closings, to keep you out of a crowded conference room. (We’ll provide more information about virtual tours and remote closings in later installments.)

How to weigh economic concerns

Coronavirus aside, anyone thinking about buying a home is also likely to be weighing whether it’s a smart idea when the economy is in a downward spiral. But in the same way you can’t easily time a stock purchase to make a profit, you can’t easily time a home purchase, either.

Recession or not, it’s impossible to time the market, whether for buying stock or buying real estate.

Roger Ma, a New York–based financial planner.

Just keep in mind that while current market conditions offer an incredible opportunity for home buyers to lock in historically low interest rates for a mortgage, quickly, because so many people are refinancing.

If you wait too long to buy, you may miss the money-saving boat. So make sure to read up on the latest mortgage rates first.

Besides mortgage rates, home buyers are probably wondering about the stability of their income, as fear of layoffs loom.

We are entering uncharted territory.

 Michael Zschunke, a real estate agent in Scottsdale, AZ.

On the flip side, putting a property under contract now and locking in a low interest rate gives a buyer some control at a time of relative uncertainty, adds Turner.

The takeaway from all this? It matters more than ever to , to calculate your home-buying budget accurately.

If you’re worried about layoffs, you should buy a home well under budget so you have enough money left over for closing costs, home maintenance, and a rainy day fund. Now is the time to crunch your numbers more carefully than ever before. Below is what you need to consider.

  • Research ways to save on the upfront costs. Many loans allow sellers to contribute up to 6% of the sale price to the buyer as a closing-cost credit.
  • Figure out how much you need to set aside for yearly. A smart budget is to have between 1% and 4% of the purchase price of your home.
  • Be sure to put aside a cash reserve. On average, it’s a good idea to sock away 1% to 3% of a home’s value in cash reserves.