Covid-19 and It's Impact on the Real Estate Market
With the nation shut down and many families stuck at home due to the threat of Covid-19, fear and financial uncertainty have overtaken the minds of many people worldwide. As part of that fear, many current and future homebuyers are concerned about the impact on real estate. There have been changes to how business is conducted as social distancing remains a top priority during these difficult times. Many showing appointments are conducted virtually and buyers are having to sign Covid-19 disclosures acknowledging their commitment to following the new health safety standards. However, perhaps a bigger concern for those in the real estate market is whether or not this pandemic will cause another housing crisis, leaving thousands, possibly millions of people upside down in their homes.
Prior to the coronavirus, there was already talk of an expected housing “correction” as many financial experts perceived the prolonged success of the real estate market to be nearing an end. As a realtor, I’ve been asked countless times by buyers waiting for the “best time”, if I believed the market will crash soon and if home prices will drop. My response is always the same, “no one can predict the future.” However, based on current home sale stats there was no indication a housing crisis was in the near future although, history has shown the real estate cycle to last 7-10 years. So with the break of the Covid-19 pandemic and the economy basically on pause, many buyers with home contracts are concerned that buying now poses a tremendous risk as their home could be worth much less in the coming months. Similarly, you have several future homebuyers waiting to buy in hopes of catching an amazing deal by buying a home at a crazy low price. Either way, the uncertainty of how long businesses will be closed leaves many people in limbo as they “wait to see what happens.”
As of now, home prices have not been affected by the pandemic and we are still operating in a seller’s market here in Florida. New construction builders, in most cases, have increased their incentives to buyers by offering to pay all closing costs and buy down interest rates. I’ve even seen one builder go as far as to include an 86 inch tv with all new home purchases. Wow! With so many added bonuses, many buyers have been encouraged to buy now as deals appear to be even better than they were before the pandemic.
At the end of the day, it’s always advised to do what’s best for you and your family. If you’ve lost your job or are concerned about the continuation of your employment due to the stay at home orders, now may not be a good time for you to purchase. However, if you feel your financial situation is secure and were planning to buy a home this year, now may be the time to take that leap. Banks have already put into play additional standards and practices to ensure buyers are not overextending themselves and to reduce their risks of defaulted loans. Some of these changes include raising minimum credit scores on some loans, lowering the maximum debt-to-income ratios, requiring that employment verifications be completed the day of closing instead of the week before, etc. Unfortunately with these temporary policies in effect, some buyers won’t be approved. However, the proper precautions are being taken to prevent a crash like the one we saw a few years back.