Is it a good time to buy a house? The coronavirus pandemic is affecting everyday life on a global scale. Social distancing has put entire industries on hold. Luckily for the real estate industry, things are still moving along, albeit at a much slower pace. Virtual home viewings are on the rise and deals are still being done. But with the massive economic uncertainty, should I buy property now? This article will give you some advice about what to think about if you are considering buying a home during the coronavirus outbreak.
Reasons to buy property now
Low interest rates
To counteract the economic downturn, interest rates have been lowered to unprecedented levels. That means you can secure a great deal on a mortgage. This is especially true in the US, where mortgage interest rates are usually 5% or even more. Depending on your location, you may be able to secure a monthly mortgage repayment that is lower than the average rental fee. Getting a great deal on a mortgage now could set you up for the next 30 years.
Get a deal on the asking price
Many buyers and sellers have already pulled out of the market. This is good news if the property you’re interested in stays on the market. Firstly, you have less competition from other buyers. That means any offer you make on a property will have a higher chance of being accepted. Secondly, sellers who are still offering their property are probably very eager to sell. They are likely aware that prices could drop over the next 2-3 years, so they will be keen to do a deal now rather than wait for the market to restabilize. Therefore, they may accept offers lower than their asking price.
If you buy what you can afford, it’s always a good time to buy
Even if the value of your property decreases over this turbulent time, history tells us that this will not last forever. A few years drop in value doesn’t matter when you plan to own the house for 10+ years. Furthermore, when the next disaster happens, which it inevitably will, you will have a safe place to be. The alternative is to wait it out and keep paying rent, which is not exactly a desirable situation.
Other than the price, there are many important things to consider when buying property during a crisis or any time at all. For example, how much will the new property increase your quality of life?
Reasons to wait to buy a property
Your personal situation
Do you have a stable job? How much savings do you have? Were you planning to buy right at the top of your budget? Do you have a flexible timeline? These are essential questions to ask yourself. Many people have already lost their jobs. If you work in an industry that is under threat, it’s a good idea to wait until you have more security. Furthermore, pandemic or no pandemic, you should only be buying something that you can really afford. Too many people rely solely on loans to pay the bills. Then when something goes wrong, they have no backup funds in place. Finally, if you are not time-pressed to buy and are just curious, then you have time to monitor the situation and act accordingly.
A short-term decrease in value
It’s not a good time to buy a house if you are planning to sell it again in the near future. The chances that you will see a return on your investment are low. The global economy has already been hit hard, and we are still not certain what will happen over the next months and years. UK house prices, for example, took 6 years to recover after the 2008 crash.
So, is it OK to buy property during a crisis? Well, there is no right or wrong answer. It really depends on your situation! The most important things to think about are:
- Are you buying something that you can really afford?
- Are you planning to own the property for a long time?
- Do you have a secure job, even during times of uncertainty?
- Are you willing to live with any complications that may arise?
- Will buying a house immediately improve your current life situation?
If you don’t have the right answers to these kinds of questions, then pause and wait. The housing market will still be here when you’re ready to jump into it. And if you are ready, then go for it! Having a house that you and your family love is ultimately more important than worrying about the timing of your purchase, especially if you are planning on living in the house for 10+ years. It could be the best decision you ever make.