The conventional advice is to buy a house in the late summer or early fall months. However, with the World Health Organization (WHO) announcement on March 11, 2020, that COVID-19, (also known as the novel coronavirus), is officially a global pandemic, conventional wisdom no longer applies.
Following WHO’s announcement, the Federal Reserve slashed interest rates in hopes of supporting the deteriorating economy and stabilizing the markets. The FED’s decision had some real estate investors jumping for joy and immediately calling their realtors and other investors in hopes of purchasing more property.
Should You Buy a Home Now?
The answer is a lot more straightforward than most will lead you to believe. Although we are on the brink of a recession, some essential workers and business owners are still gainfully employed. If you can afford a mortgage and the cost involved with purchasing a home or you work in the industry that is unaffected by the COVID-19 pandemic and/or you have a hefty saving account, there is no reason you should avoid homeownership right now.
Interest Rates are Almost at Zero
If you purchase a home now, you’ll be paying a lot less to borrow money. With the interest rates being at a historic low, your monthly mortgage payment will have a lower interest rate, and you can afford to pay more since the monthly borrowing cost will be lower. However, there is some risk involved with the economy in general. With the threat of unemployment and uncertainty in the market, more and more banks will inevitably begin tightening their lending standards. Thus, making it harder for individuals to secure a mortgage, despite the lower interest rates. A recent example of banks tightening their lending standard is Chase, who recently raised their credit score criteria to 700 and raised their down payment requirement to 20%.
You May Get a Discounted Price
Another reason why it may be beneficial to purchase a home right now is that sellers who need to sell their homes may be forced to sell at discounted prices, which could easily be 10 or 20% below fair market values. Due to this concern, some sellers have resorted to taking their homes off the market for the time being. However, there is still a group of sellers that MUST sell their homes no matter what and are better off financially taking a discount offer instead of maintaining ownership.
You Should Buy Within the Next Six Months!
If for some reason, you are a little hesitant to purchase a home right now, but you know it’s in your future, time is on your side, at least temporarily. It can be predicted that in the next six months or so, home prices will fall, and interest rates should remain low to help spearhead the economy out of the current recession. Therefore, if you want to take advantage of the low-interest rates and buy at the lowest price possible, you may be better off waiting a couple more months. In any event, you should certainly make a move by the end of the year. Now is an excellent time to start browsing online and get yourself familiar with your local market.