In 2020, the housing sector has been hit by significant changes. The coronavirus, which appeared in China and spread around the world, provoked a temporary shutdown in the industry. Naturally, people are worried about stopped projects, as well as getting mortgages. The situation is gradually stabilizing. Currently, companies are working as usual. If you are seriously thinking about buying your own home, then you will find all the necessary information on our website.
Intro
People who decided to buy a home and have loans found themselves in a difficult situation. Some companies stopped construction in the spring and resumed it only now (sometimes, partially). Others want to buy a house but are afraid that the fall will repeat the spring situation. This fear is fully justified.
Real estate agencies are also experiencing some crisis. The government of many countries has banned accepting clients in offices. Real estate agents must do all the work remotely. Personal meetings with the future owner of the house are allowed. But the customer cannot bring family and friends with him to the office or inspect the home.
In this case, we recommend choosing some of the best options online for you. You can view photos of houses with the whole family. Also, share photos and impressions with your friends. It is imperative to make an informed decision. Then you will only have to verify the correctness of choice by visiting these houses personally.
Difficulties can arise if the home needs interior decoration or renovation. Construction crews are often unable to work as a whole. Also, each employee should wear a mask and gloves, use hand sanitizers every hour or two. All this slows down the process and leads to an increase in the total cost of services.
Due to the outbreak of the pandemic, the real estate market first stalled and then slowly began to open. But the changed conditions have adjusted prices. The cost of finished homes has dropped slightly. Therefore, for those who had the necessary amount in stock, there was an excellent opportunity to save money. Mortgage rates have also dropped slightly, so clients with a stable job or business can also benefit by buying a home now. The decline in mortgage rates has prompted a wave of refinancing applications from people who are already paying off their mortgage. This is a smart move, as refinancing will lower your monthly payments.
People also received additional protection from the state. The government imposed a moratorium on foreclosures. Loan companies are now required to offer deferred or reduced payments on any mortgage backed by Freddie Mac, Fannie Mae, or the Federal Housing Administration (FHA).
Economic impact
The New York Times published economic calculations showing the dependence of mortgage rates on the price of stocks and bonds. At the start of the pandemic, the value of shares of almost all companies began to decline. Investors drew attention to government bonds, which, accordingly, began to rise in value. At the same time, the yield on government bonds also fell to almost zero. Their purchase will help not to lose money, but not to earn. The rate of mortgage loans, as well as the refinancing rate, directly depend on the yield on government bonds. At the beginning of the pandemic, it averaged 3.8%. The government is discussing a further decrease in the interest rate on mortgages, but the final decision has not yet been made.
It should also be borne in mind that the standard requirements for borrowers have increased. Now, to buy a home with a mortgage, the future owner must have a higher credit rating (at least 700 points) and more extended credit history. Cases of refusals for young people who are just beginning to build their careers have become more frequent. Also, many banks started to require a guarantee from a person who also had a high credit rating. The amount of the down payment is at least 20% of the value of the house.
Where the housing market currently stands?
In some cities of the United States, property prices during the pandemic, on the contrary, increased. Seattle and Los Angeles were among these cities. This happened because the number of offers from construction companies and real estate agencies decreased by almost 30%. The small amount of homes for sale has led to an increase in people willing to buy this property. Prices soared immediately. Analysts of the economic situation and the real estate market believe that the sharp decline in the supply from the agencies is connected not only with the pandemic. At the beginning of 2019, this sector of the economy overgrew. The recession was the logical end of the peak.
Leading economists of the country suggest that if there is no second stage of the pandemic, then we will face:
• Decrease in the number of unemployed;
• Stable growth of wages;
• Growth in demand for real estate, followed by an immediate increase in the supply of houses and apartments in new buildings;
• Growth of the interest rate on the mortgage loan;
• Reducing requirements for potential borrowers.
Bottom line
If you have money for a down payment when applying for a mortgage, then now is the best time to make a purchase. Remember, you must have an excellent credit rating and at least one guarantor. We don’t know if the coronavirus will spread again. When construction companies are forced to suspend work or lay off people back, you will get into a difficult situation.
You should take into account is the construction time. If you are buying a house project that does not yet exist, expect at least 6-9 months. This period may be extended even if the pandemic again captures the United States. However, a large number of unemployed people who want to get a job in a construction company can help reduce the construction period to 4 months.