Tumultuous times can often bring about positive change in life – and therefore, a downturn in our economy due to our current climate may be the best opportunity you’ll ever have to get your foot in the front door of your new home.
Whether you’re considering buying a home, selling one, or investing, it’s important to consider the impact the pandemic is having on real estate pricing as opposed to how many homes are sold in a given market; while it’s undeniable that we’ve seen a huge dip in sales volume across the United States over the last few months, real estate prices have not budged much in most markets. Now that’s what you call market resilience.
Unlike the volatile stock market which can lose great value within just a few days, the real estate market is one of the most resilient assets you could invest in.
Today, we’re breaking down the current landscape of the real estate market and how the pandemic may impact you as a buyer, seller, or investor.
How The Pandemic May Impact Real Estate
To understand how the market may be impacted, we have to understand how the price of real estate is fundamentally driven by supply and demand: If there are many houses on the market and not many buyers, prices go down. If there are few houses with many buyers, prices go up.
So what about the impact of this health crisis on supply and demand? As with most markets, most people are taking a wait-and-see approach. Listed numbers have fallen dramatically since the start of social distancing became the guideline across the world, and so has the number of buyers. As a result, most markets haven’t yet seen a big impact on prices. In the coming months, the impact on the market will largely depend on how long social distancing measures last and to what extent the economy is impacted.
Fortunately, you don’t have to compromise your safety to see homes for sale. The real estate industry has been moving toward online transactions for years, so we’re geared up to accommodate social distancing – from conducting video tours to financing online.
When life is back to our new “normal”, there will likely be a surge in houses hitting the market. People still need to sell their homes, and thus, high supply.
Will buyers be lining up to buy those houses? Likely not as many as there would have been if we weren’t experiencing a pandemic, because a lot of households feel the pinch from an income perspective. People have lost their jobs in unprecedented numbers and potential down payment savings have been used to pay for day-to-day expenses.
If this prediction materializes and we see a high level of inventory with low demand, buyers will have more negotiating power and prices should decrease.
If you are thinking about buying, keep an eye on the market. Now is the time to talk with your mortgage broker to find out how much you can afford, to get pre-approved and to hold a rate for you.
If you are buying rental properties, think about how the pandemic might impact your ability to find tenants and their ability to pay rent if they have their career or health impacted. Invest for cash flow, ensure you have plenty of reserve funds, and look for exceptional deals. Invest in a strong market where the economy (and jobs) are expected to rebound and where the population is expected to keep growing.
It’s impossible to predict how long the pandemic will impact the economy, but history shows that housing markets will bounce back.
Your Metro Agent Is Here To Guide You
At Metro Realty, your agent is your advocate. Particularly in an uncertain market, you need an agent who goes the extra mile–– one whom you connect with, and who really takes the time to listen & understand your needs.
When you work with the Metro team, you’ll quickly discover why Boston has trusted us since 1984.