2020 has been one of the most turbulent years in American history. From social unrest to the coronavirus, this year’s events have undoubtedly affected real estate trends.
Before the pandemic, I expected interest rates to stay low and home prices to continue rising. Global events like Brexit have disrupted the housing market, so it was safe to predict that home-buyers in 2020 could expect to see lower interest rates.
Economic uncertainty and government lockdowns have caused real estate transactions to come to a screeching halt. Sellers have stopped listing, and there are fewer people willing to take on a mortgage during this season of economic uncertainty.
If you are buying or selling a home this year, here’s what you need to know.
Home Prices Are Going Up
While home prices dropped to a 0.6% growth rate at the start of the coronavirus pandemic, they bounced back to a 3% growth rate just one month later. Home prices are slowly increasing despite the pandemic.
While the housing market has seen explosive growth rates in previous years, I don’t expect home prices to exceed a 4% growth rate in 2020.
If you’re selling your home, you may still be able to turn a profit, but expect fewer offers on your home.
Working with a real estate agent can help you stand out from the competition. There are fewer buyers right now, so you’ll need to make your home the most appealing option on the market, especially if there are similar ones nearby.
Don’t accept any low-ball offers. When it comes to selling homes this year, patience equals profit.
If you’re buying a home, coming up with a realistic budget is more important than ever. Now is not the time to take on more debt than you can handle.
Buy a home that makes sense for your finances. You can still get a nice home that suits your needs and your budget, even if it doesn’t come with every amenity you dreamed of.
Extras can be added on later when the economy is more stable. Increase your down payment and look in less popular areas if you can’t wait until next year to buy a home.
Low Interest Rates
Unsurprisingly, mortgage interest rates have remained low.
For sellers, low interest rates make it more likely that your home will be sold. For buyers, it means you’ll pay less for your home and be able to save money by purchasing now.
Growth in Rural Areas
Urban areas have felt the effects of the pandemic more than rural areas. While social distancing is almost impossible in crowded cities, those living in the country or the suburbs can easily avoid close contact with others.
The cities have also been epicenters for riots, protests, looting, fires, and social unrest. While proximity to downtown and all its offerings was once a perk, sellers in rural areas may have the upper hand for years to come.
Buyers won’t mind longer commutes for work and errands if it means they can protect their health and safety. More people will opt to live away from the city in response to this year’s events.
This exodus from city life has already played out in New York as thousands of city-dwellers abandoned their Manhattan apartments in exchange for their spacious second homes in Florida at the start of the pandemic.