Lockdown measures have had an impact on nearly every aspect of our lives and the housing market is no exception. The number of houses sold dropped and new listings declined to nearly zero as the world went into quarantine. The housing market is slowly starting to bounce back. CNBC reports that while pending home sales are down 32% from last year, the numbers are increasing. That means more people are starting, or restarting, the search for their new home, bolstered by low interest rates and a recovering job market.
While life starts to return to a "new normal," there's no doubt that the coronavirus left a lasting impact on the real estate industry. Agents moved quickly to introduce measures to deal with the pandemic. Now many of those changes could be here to stay. Here are seven ways the coronavirus changed the real estate industry and what you can expect when you start shopping for your new home.
1. More of the homebuying process is happening online
From viewing potential new homes to closing the deal, coronavirus forced a lot of the homebuying process to move online. One of the biggest changes for homebuyers was how they viewed potential properties. Real estate agents started offering more virtual and 3D online tours. A lot of the paperwork involved in purchasing a new home is happening online as well. Some states approved virtual closings. That meant both buyers and sellers could sign their paperwork in the comfort of their home before sending it back to the title company.
A lot of these coronavirus-related adjustments will be here to stay. When you start looking for a home, your agent may use online video technology to show you around a property. While virtual tours probably won't replace a live tour, they can help you eliminate some properties without viewing them in person first. You'll probably do more of your closing online, too, as well as shopping for the right mortgage options.
2. Closing on a new home may take longer for a while
While some closing processes moved online due to coronavirus, it didn't mean the process got any faster. In fact, for many people, closing on a mortgage took a lot longer. Right now, virtual closings put you at the mercy of another person getting the paperwork signed on time. Things like employment verification can delay the closing process, too. Many employers aren't currently open or are operating with reduced hours and staff. Closing gets even more complicated with interstate transactions. Rules about social distancing and which industries are able to operate vary from state to state. Some real estate offices are still closed, while others haven't returned to working full-time.
So, for now, you may need to have some extra patience when it comes to closing the deal on your new home. As people adjust to new methods, though, the online process will become easier as it's likely here to stay. There may be ways to speed up the closing process, especially if you're willing to do an in-person closing. That might give you an edge when making an offer to an eager seller who wants to close as soon as possible.
3. Viewing homes in-person will be a different experience
In-person viewings will most likely still happen, but they may look different from what you're used to. Real estate agents had to say goodbye to the traditional open house during the coronavirus pandemic. Real estate agents worked to limit private viewings, too, and asked that just a few people view the property at a time. Masks, gloves, hand sanitizer and even foot coverings for shoes became more commonplace to cut down on risk of contamination. Once completing the tour, the agent stayed behind to wipe down any surfaces that may have been touched. That included light switches, banisters and doorknobs.
These sorts of safety measures may relax when the reported cases of coronavirus decline. But they won't disappear entirely. In the future, it's very likely that the number of properties you view in person will be far fewer than the number you might have seen before coronavirus. That's due to both the effort involved in sanitizing them after viewing and the advances in virtual tour technology.
4. What you want in a new home could be changing
It's not just how you buy that's changing. What you buy could look very different in the future, too. The coronavirus made a lot of potential buyers rethink what they want in their new home. After all, when under quarantine restrictions, your home environment is a big deal. That's why high-density urban apartments could now look less desirable to buyers. More new home searches could happen in the suburbs, where it's easier to get outside and maintain distance from neighbors.
More of us could be working from home long term, too, so the demand for extra rooms could increase. People may want to find space for home offices and hobby rooms. Where these were once seen as luxuries, they're now more likely to be seen as must-haves in a post-quarantine world. So there may be more competition for quarantine-friendly homes.
5. There will be fewer homes on the market —for now
There was a lot of uncertainty in the real estate market when coronavirus hit. No one was sure how the market would react and, because of that, the industry hit the pause button. Homeowners decided to delay listing their properties for sale until they knew what the market would do. They needed to know whether they could get the price they wanted. Because of these concerns, there were a lot fewer homes on the market at the onset of the pandemic.
That will change. As confidence in the economy starts to rebound, people are deciding to list their homes. Prepare yourself for a slow recovery, though. What it does mean is if you aren't seeing something you love on the market now, wait a few months. You'll probably see more properties available on the market soon. But the rate of homes going on the market will likely be slower for a while.
6. Home prices could see a drop
No one really knows how the coronavirus will impact housing prices in the coming years. Right now, there's a good chance you'll see a decrease in property prices. People who wanted to sell their homes before the pandemic could be more likely to drop the price to encourage offers. With many worried about the job market, selling a home may become a necessity as monthly payments become less affordable. That could result in a decline in market prices, as well.
Whether that price decrease will remain in the future is anyone's guess. But you may be able to get more home for your budget if you can take advantage of the slower market now. If you have a stable income and are in a position to buy quickly, you could make an appealing, but lower, offer. Getting pre-qualified for a mortgage may give you an advantage, too.
7. You may have more time to lock in a great interest rate
In March, the Wall Street Journal reported that the Federal Reserve cut federal funds rates to almost 0%. This cut affected mortgage rates, which are seeing record lows. These ultra-low interest rates are an effort to keep the economy moving. If that effort works, you'll likely see interest rates rise again soon. If you can, you'll want to lock in these low interest rates now.
The good news is that you'll probably have longer to lock in a great interest rate in the future. Instead of offering the typical 30-or 60-day lock on rates, some lenders are allowing borrowers to lock in for as long as 120 days. This could be a change in the mortgage industry that sticks around. That will give you more time to close on your new home and make sure you're still getting the best deal possible.
Should you buy a home during coronavirus?
Even if you aren't ready to lock in an interest rate, now may be a great time to shop for a new home. After all, low interest rates can translate into lower monthly payments, making a new home more affordable than ever.
Coronavirus changed the way we do a lot of things, but it doesn't have to change your dream of owning a new home. Speak to a Home Lending Advisor today to make sure you don't miss out on getting a great rate on a mortgage.