The coronavirus pandemic has deeply affected the immovable industry, but what lies ahead for the housing market as we move closer to the end of the pandemic every day? COVID-19 has caused great uncertainty for home buyers and sellers, but it’s important to know what lies ahead to see if it’s the right time to invest in real estate.
The current situation
While the situation is indeed better today than it was last year, the profound effects of the pandemic on the housing market are still apparent. The most important of these is the scarcity of stocks. As a result of the pandemic, smaller homes were put up for sale because homeowners were loath to have potential buyers at this time.
In addition, the coronavirus has also caused a slowdown in the construction of properties. So, at present, although demand is increasing, construction has not yet kept pace. Demand is also partly driven by record interest rates triggered by the economic challenges brought by the pandemic. These rates can then be used to motivate buyers to participate in the housing market.
Likewise, current real estate affairs are not yet in full swing. Due to health protocols in some areas still deeply affected by COVID, open doors are less accessible than they normally have been, meaning people are less likely to want to buy homes in which they have had the experience of remaining in person. .
On the buyers’ side, unemployment remains widespread due to the pandemic. In addition, the surge in delinquency rates caused by the pandemic has also made banks more reluctant to extend loans to people. Credit standards, already tight at the start due to the 2007-2008 financial crisis, have tightened further.
Predictions for 2021
No imminent increase in mortgage rates
At the start of 2021, we saw a new record mortgage rate when the rate was 2.2% in January. While that figure then rose and appears to be rising steadily, the mortgage rate is predicted to be no more than 3.4% for the remainder of 2021.
These low rates should encourage buyers to spend more and help the economy rebound, and it should be a sign for people who are planning to buy a home soon to do so as soon as possible. If you do it now, you will enjoy great rates for the next 30 years.
However, it is also important to note that obtaining a loan is now more difficult than it used to be. NINJA Loans (No Income, No Job, No Assets) are a thing of the past as lenders are now more cautious due to what everyone learned in the 2008 recession so have good credit is a big plus.
Prices will continue to rise
One of the things we have learned from the pandemic is that our homes can also become our workspace. Thus, the demand for housing with offices has reached record levels and due to the current shortage of stocks, prices have increased.
In other words, the supply of real estate in the housing market has yet to meet the demand, so it is highly likely that buyers will compete for a property and even engage in housing wars. ‘auction. It can also cause some homes to sell for more than the asking price, pushing up median home prices.
More houses will be for sale
With more and more people getting vaccinated every day and with the gradual easing of health restrictions, expect the real estate industry to be back to full force in no time. Because there is less anxiety now when it comes to catching COVID, homeowners are more likely to list their homes and hold open houses.
While it remains to be seen whether the incoming inventory expansion will be able to meet housing demand, it is still a good sign that the housing market will reach a more balanced state. Buyers will now have an increased advantage as they will not have to compete with rare properties which may even cause them to pay more than the value of the home. As a greater variety of options are presented to buyers, prices will also adjust accordingly.
People willing to spend more and upgrade
The stagnation caused by the pandemic may make people more enthusiastic than ever to spend, as they are now encouraged to live more in the present. Many people can take the leap of faith to buy a home, and even current homeowners can splurge on improvements to their own property.
Since homes can now also serve as alternative workspaces, homeowners will be more willing to spend on upgrades to improve their quality of life, which will also increase the value of the property.
Will there be a real estate crash?
The drastic changes in the housing market that we have seen and will continue to see may cause some concern as to whether there will be a housing crash. However, experts say there is nothing to worry about.
Unlike the previous housing crisis, today’s practices have changed. Before the Great Recession, lending practices were extremely flexible, and this has been corrected today by higher lending standards. In addition, there do not appear to be any external factors that could trigger a real estate crash.