“Is now a good time to buy a house?”
This is one of the questions that many people seem to be asking. While the COVID-19 pandemic has affected numerous sectors of the economy in the past year, the real estate industry saw a boom in sales. Despite the weakened economy and the loss of millions of jobs across the country, people continue to flock to real estate agents and apps to help plan out their first home purchase or big move out of the city. In August of 2020, house sales jumped to 46%, with mostly millennials and those working from home making up many homebuyers taking out home loans.
While the market could make up for lost sales by the end of 2020, interested homebuyers may be wondering if this streak will continue this year. Find out how the pandemic is shaping the future of the real estate industry and whether now is the right time to buy a home.
How the Real Estate Industry Has Changed Since the Pandemic
High Demand, Low Supply
The reason for the increased demand for homes in the past year has mostly stemmed from the work and learning changes brought about by the pandemic. Many people are now dealing with remote work and online classes, making one’s living situation as important as ever. Because of this, households have found that their current living situation no longer fits their needs, whether that means lacking the separation of work and personal responsibilities. This has prompted people to move out of the city and into suburban environments, allowing more space for work, study, and play, which is especially important for bigger families that have to deal with all three.
Sectors of the economy have begun making the shift to digital, using social media and other technology to continue operations more efficiently. The real estate industry has benefited from using these channels, with agents doing virtual house tours through edited content, live streaming, and even video conference calls like Zoom, Google Hangouts, and Skype. Some agencies even offer 3D house tours, where potential homebuyers can view a house at different angles at their own pace. This allows potential buyers to have a look at houses without putting themselves or anyone else at risk.
Trends to Watch Out for in 2021
Despite the demands for more housing, we’re likely to continue seeing the market struggle to meet the demands of aspiring homeowners. A low supply of housing can mean more difficult househunting on your end, as you may find yourself having to sacrifice the things you want in a home to actually find a home. Prioritize what’s essential, and you can upgrade your home later on. You can also consider finding homes in less competitive areas with the help of a real estate agent who knows the twists and turns of different neighborhoods.
Continued Increase in House Prices
Nearing the end of 2020, house prices skyrocketed up to 15%, raising the national median to over $300,000. For sellers, this is good news, but for buyers, this is anything but. With this in mind, homebuyers need to consider their current budget and stick to that budget when looking for a home. To make things easier, it’s important to have saved up at least 10% to 20% of your estimated downpayment to avoid private mortgage insurance or PMI, which can lead to added interests and extra fees.
Continued Low Interest Rates
While house prices have increased, mortgage rates continue to stay significantly low. In 2020, rates dropped to 2.31% for an average 15-year fixed-rate mortgage, the lowest it’s been for 30 years. This somehow offsets the higher prices of a house, but don’t let the lower interest rates make you feel like you have to purchase a home as soon as possible. It all depends on your budget and whether you’ll be able to pay off your home in the long run.
A Rise in Online Services
With technology playing a big role in the post-pandemic society, we’re likely to see more virtual services pop up in the real estate industry. From virtual house tours to virtual agents, buying a home can be done with a click of a mouse or a swipe of a finger. What’s more, you can get these services at half the usual costs compared to having all these tasks done in person. However, when it comes to viewing houses, for example, it’s still in your best interest to visit the house in person. Just remember to follow the proper health and safety protocols.
To answer whether it’s the best time for one to buy a house, it depends on more than just the market. Consider your budget and assess how important finding a house is for you in the middle of a global health crisis. This, partnered with a good amount of research and introspection, will help you find the answer. If you decide to purchase a house, remember not to rush and take things one step at a time.