COVID-19 is a health pandemic that’s causing a financial crisis, but calling it a housing crisis is inaccurate and a bit simplistic. Yes, the housing market is tight. However, this lack of flexibility is more closely related to the fact that people are clinging to their homes, and those looking to move to a new space are working within new parameters.
1) 2008 Vs. 2020
One of the big challenges of 2008 was the uncertainty in the banking industry. Monetary tools that were supposed to be stable turned out to be something quite different, and this uncertainty triggered tighter regulations and many changes to the lending market. There followed a large reduction in home-building, which tightened inventories. Is there uncertainty? Clearly. But the monetary vehicles on which we rely are stable.
While consumer spending is down, saving rates are going up. Those who own their homes are spending a lot of time in them and making improvements. Those who rent and want to own have had their spending options limited and are saving for down payments. You don’t need to go to the bank to apply for a mortgage, and lending rates are currently at historically low levels. As consumers cling to what is solid in their financial lives, their homes actually grow in value.
2) The Bottom Line for Sellers
COVID-19 has added a layer of stress to nearly every activity we undertake. If you’re working to sell your home, be aware that people planning to move are looking for certainty. Do what you can to make your home as move-in ready as possible, and work with a realtor who can help you show off the condition of the space. While you may not get the optimum price, you may also be able to get a great deal on the next home you buy.
The jump in unemployment may have slowed the market for big ticket purchases in the United States, but the rules for getting a mortgage are firm. Programs to help low income and low savings rate buyers, as well as rural real estate buyers and VA borrowers, are getting a lot of air time and making home ownership possible for many.
3) Valuations May Have Slowed, but are Still Growing
Home valuations are much more logical than they were in the 2008 bubble. Lending restrictions have contributed to this slowdown in valuations, but as inventory tightens and competition grows, prices continue to rise. You’re still going to see steady growth in the value of your home. If you plan to move, make improvements that depersonalize the space. If you plan to stay, consider making changes that will allow you to age in place, work full-time from your home, or create spaces to expand the size of your family.