Should You Buy a Home Now?
Part 1 Buyers, of 2 Parts
The real estate market is in flux and nobody knows what is going to happen with this pandemic and how it is going to effect all of us. The “stay-at-home” suggestions will negatively effect mass numbers of people in all service industries across all socio-economic sections of our society.
For buyers, the good news is that interest rates for mortgages is very low. While listings will become more scarce, there are less buyers out shopping for a home, right now.
For sellers, this means, less competition in selling your home, interest rates being low, attracts more potential buyers. If it is time for you to sell, regardless of the world news, I have some creative suggestions that I can implement to sell your home during these unsettling times. ~ Dianne
Our office is taking precautions to keep ourselves and our clients safe. For the last couple of weeks, out of concern for health and safety, we have promoted online virtual solutions using technology such as Zoom meetings with virtual tours: as well as FaceTime, and Facebook Live streaming. We have mostly eliminated or reduced paper brochures and documents to prevent unnecessary transmission risks and to protect our environment by making PDF’s available and using Authentisign for closing documents. We are using different protocols for showing properties through virtual reality 3D walk-throughs and virtual tours. We have successfully closed properties where buyers have only toured properties without being physically in the space. Virtual tours can happen throughout the buying/closing process such as home inspections.
Regardless of whether you are a seller or buyer, this time might be a good time to make a lifestyle change and we are here to serve you in this transition.
I would like to hear from you. What are your needs? How can I help you?
Below is some information from sources around the internet:
Resources & Links:
|Santa Fe Information:
|New Mexico Information:
|Santa Fe Information »
|US Centers for Disease Control:
Should You Buy a Home Now? Answers Ahead
Article from Realtor.com
| Mar 16, 2020
The possibility of a recession is uncertain, but that doesn’t mean it’s necessarily a bad time to buy a home. These tips will help you through the process.
Between the coronavirus pandemic and a plummeting stock market, many may wonder: Are we headed for a recession? Anyone hoping to buy a home anytime soon would probably like to know the answer before committing to a major, long-term purchase.
While economists say that the odds of a recession are uncertain, evidence does suggest that, at the very least, economic growth is substantially slowing, says George Ratiu, senior economist for realtor.com®.
The International Monetary Fund downgraded its global economic growth predictions, oil market battles and COVID-19 fears are roiling the stock market, and trade wars with China, European countries, and others are still possible.
And if you believe in self-fulfilling prophecies, consider this: According to a realtor.com survey of consumer sentiment conducted in late 2019—before the coronavirus news broke—more than 30% of Americans had already expected to see a recession in 2020. Plus, 56% said they would postpone buying a home until the economy improves.
“With expectations of slower growth, I think consumers are internalizing that, and possibly taking a longer look at their purchasing decisions,” Ratiu says.
Yet that same survey also found that 44% plan to continue their house hunt, which experts say may make sense for many.
“Recession or not, it’s impossible to time the market, whether for buying stock or buying real estate,” points out Roger Ma, a New York–based financial planner and owner of lifelaidout.
And considering that mortgage rates recently plummeted to their lowest level in nearly 50 years, the time may still be right for those who have their finances in order.
How much do I have saved?
A high savings account balance usually puts you in a good position to buy the home you want. But, it’s even more important during a recession, when the job market may be unstable, Ma says.
So how much should you have saved? Ma recommends having 20% of a home’s price in the bank for a down payment, about 4% to 6% extra for closing costs, and enough to cover three to six months of living expenses in case of an emergency.
What kind of financing will I qualify for?
Getting pre-approved for a mortgage is an essential first step in buying a home. The better your credit score, the more likely you’ll lock in a mortgage with a low interest rate and good terms, Ma says.
Lenders will vary in what they consider an acceptable credit score, but generally a score of 750 to 850 is considered excellent, 700 to 749 good, and 650 to 699 fair.
“Instead of trying to time the market, make sure that the timing is right for your own personal situation,” Ma says.
Here are six questions to ask yourself to determine if buying a home while a possible recession looms is the right decision for you.
How will home prices be affected by a recession?
During a recession, home prices may drop—or at least not go up too much. This could mean that if a recession happens soon, any property purchase you make now might dip in value. Likewise, if you wait and purchase in the midst of a recession, you could stand to snag a deal.
So should you wait? Perhaps, although one argument against waiting is that housing inventory remains low, Ratiu says.
As such, “even if there is an economic slowdown, we will see much more modest price reductions,” says Fiona Petrie, executive vice president and managing director of Re/Max Integra. “At the end of the day, it is always a good time to buy, if you can afford to buy a home.”
The only bad time to buy a home, recession or not, Petrie says, is when you buy beyond your financial means. Get a handle on your financial situation, and you’ll know how much home you can afford.
What’s my time horizon?
Time horizon is another important factor to consider. This refers to how long you plan to stay in the home to ensure that the purchase is a solid, long-term investment.
Homeowners these days tend to stay in their homes longer than in the past, around 13 years, according to the National Association of Home Builders. But, Ma says, staying in a home at least five to seven years is a good time horizon.
The longer you plan to live in the home, the better if a recession hits, Ratiu says. Years later, the economic situation may be improved.
“Over a longer time horizon, housing tends do fairly well,” he explains. “If the buyers are ready, in a good financial and economic position, it’s as good a time to buy as any.”
How healthy is my local economy?
Along with your own financial health, consider the economic health of the city or town where you plan to buy, Ratiu says. During a recession, not all locations experience the economic slowdown at the same rate or in the same way.
Look back at the severe 2008–09 recession, he says. Larger cities felt an immediate impact, while others didn’t see the effects until a couple of years later.
“For buyers it’s important to consider what their local market conditions look like,” Ratiu says. “Is the economy well-diversified? Is employment strong? Is the outlook for jobs positive, and why? Because those definitely are strong drivers of housing demand and health.”
In response to the concerns about COVID-19, commonly referred to as coronavirus, the National Association of REALTORS® is providing guidance to help REALTORS® respond to the coronavirus’s potential impact on the real estate industry. Any updates from NAR and its response to the coronavirus emergency will be collected on this page.
The post Should You Buy a Home If a Recession Is Imminent? Answers Ahead appeared first on Real Estate News & Insights | realtor.com®.