Are you looking to buy a home or refinance in 2021? COVID-19 has changed the way that people are buying homes and how they are financing them. Here are some things to consider.
1. Low Mortgage Rates for New Homes
Mortgage rates plunged early on in the pandemic, and are expected to remain there.
Finding a home without entering into a bidding war can be difficult, especially for first-time home buyers who are less flexible with their spending. Make sure that your applications are current so that you can move swiftly, and know the difference between getting pre-qualified and pre- approved for your loan.
The effects of the pandemic on the economy have been harsh, but one bright side could be found in taking advantage of the historically-low mortgage rates that are now available to refinance your home. It’s a great time to see if you can swap out your higher-rate mortgage for a better one.1
3. Low Inventory
Right now, during the pandemic, inventory is scarce. Realtor.com, in their 2020 forecast, said that inventory could reach a historic low, particularly for entry-level houses.
“In most places,” they say, “it will still be a seller’s market, and first-time home buyers will especially be at a disadvantage because there aren’t enough starter homes to go around.” This means that sellers will continue to receive multiple offers on their homes. In the spring of this year, there were almost 20 percent fewer existing home sales across the country than for the same time period in 2019--largely because sellers did not want strangers walking through their homes and possibly spreading the virus.
4. Virtual Home Sales
While buying a pair of jeans without first trying them on may be a big leap of faith for some people, others are actually purchasing homes sight unseen. Sellers might remain reluctant to invite people they don’t know into their homes, giving birth to the “buy online” concept for home buying. Technology for virtual home tours has improved tremendously. Now, it can feel like you are practically walking through a home without ever stepping foot inside. All that is missing is the scent of vanilla candles and fresh-baked cookies. Virtual home tours are great for both buyers and sellers; buyers can see more homes in a day than they would be able to see in person, and sellers don’t have to worry about strangers in their home. Even once stay-at-home orders and social distancing is a thing of the past, buyers and sellers may continue to take advantage of the ease that this new technology offers.
- Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Restrictions apply.
5. The Home Resale Market and New Construction
Prices on homes are rising at a greater percentage than income is rising. Some first-time buyers have expressed concern about buying at “the top of the market” and have put off buying a home in case home prices fall. Safety concerns have kept both buyers and sellers from venturing into the market right now. But with the economy reopening in many areas of the country, the resale market should pick up as well. Demand for entry-level homes will be great. The National Association of Realtors says that new-home construction also needs to increase to keep up with the housing demand. Otherwise, they say, home prices will rise too quickly and first-time buyers will suffer, even though mortgage rates are at a record low.
If you are planning on moving in the next few months, or have questions about any of these trends, please reach out to me at email@example.com or rate.com/cathymaloney for more information.
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