When you’re in the market to buy a home, the last thing that you expect to cross your path is a worldwide pandemic. With COVID-19 taking the lives of over 68,000 Americans and counting, it’s normal to wonder what will happen next. With stay-at-home orders in place and businesses closed, it’s obvious that the economy is taking a hit. How will this affect the housing market?
COVID-19 Housing Market Effect
Not only have the novel Coronavirus already caused the stock market to crash, but it’s also displaced millions of Americans out of a job. What does this mean for real estate investors? Currently, we can see that housing prices are at an all-time low and could begin to drop further. Sounds like a dream, right?
Buying homes at a low cost may seem like the best idea to put forward in a time like this, but a rushed investment is never a good investment. Always be on site to inspect the property that you’re buying, and be aware of the problems of the house. You may not have the traditional resources available to help you fix whatever goes wrong.
When it comes to the overall housing market, Zillow conducted a study to help real estate investor have a better idea of what to expect. They examined how the housing market has been affected in previous pandemics. They discovered that the housing market simply “paused.” Home prices remained steady or only saw a slight decrease in prices.
Many people may be wondering how a pandemic like the Coronavirus can have only a minor effect on the housing market since it hit a bullseye with the stock market and other areas of the economy. The answer is simple, in those times and today, there were fewer transactions which means not many homeowners had to sell at a loss.
Looking At The COVID-19 Data
When looking at the housing market data, several interesting things come up. For one, web traffic to real estate portals such as Zillow and Redfin has seen a decrease of almost 40 percent directly after the pandemic began. As for new listings on houses, they have dropped 70 percent. Additionally, weekly mortgage applications have declined to 17.9 percent as of early April.
As we can see, many purchases of homes have declined dramatically since many people have lost their jobs and aren’t in the financial position to shop for a home. This also implies that homeowners are unable to make the mortgage payments that they currently have.
According to the Mortgage Bankers Association, requests for forbearance have jumped 3,000 percent in March. Safety measures are currently being put into place to protect homeowners from foreclosures but these are short term and may not last as long as it is needed.
With the potential for disaster, and homeowners during a pandemic, the housing market can seem bleak. It’s important to do your research, hold off on purchasing a home if you are not in the financial position to do so, and think ahead on how the housing market may be affected by COVID-19.