At the start of the year, many renters looked forward to house-hunting in earnest. But, just as the housing market was starting to pick up, COVID-19 slowed things to a trickle. If you're one of the many prospective homebuyers wondering whether or not to proceed with a home purchase—or stay put in your rental—you're not alone. Let's take a look at the pros and cons of continuing to rent or proceeding with a purchase.
Young, first-time homebuyers will find lenders being pickier than ever with their financing qualifications. Unestablished, prospective homebuyers may have a difficult time securing a mortgage to finance their home purchase if they have a low credit score. If you find yourself in this category, continue renting while building your credit score and adding to your down payment savings. If you have strong credit, financing shouldn't pose an issue, and you can jump into your house search.
While you don't have a crystal ball that allows you to see into the future, you probably have a decent idea of how your company is doing. The obvious answer is that you should continue renting if your company's outlook is uncertain, or if they're beginning to downsize as a result of the shutdown's economic impact. If you have the slightest doubt, you probably want to continue renting for a bit until you're comfortable.
Forget About a Bargain
Inventory levels were already on the low side as we entered 2020, and with COVID-19 disrupting—and even halting—construction and real estate transactions, inventory levels remain low. What this means for buyers is that it is a seller's market, and you may find yourself competing for homes.
Low inventory levels often mean that the pool of buyers is larger than the number of available homes, making it a competitive market, thus, driving up home prices. This is great for sellers, as their homes sell quickly and typically over list price. For buyers, this is also a great time to be on the lookout as mortgage rates are at historic lows. When there is an excess of inventory on the market, buyers can often negotiate sale prices, as sellers are eager to settle on their homes.
While real estate transactions are starting to get back to normal, agents are adhering to a new normal. Social distancing still applies, so you can expect to spend a lot of time communicating with your agent via phone calls, video chats, and emails. When you're ready to view homes, you'll likely be asked to wash your hands as you enter, or utilize hand sanitizer, and some homeowners are requesting that house-hunters wear gloves and booties, or take their shoes off at the door.
Househunting with an agent also looks different, as most real estate agents across the country are driving in separate cars from their clients. It's a different way of doing things, and will likely be the standard for a while to come.
For more on COVID-19 and the real estate comeback, check out HomeLight's Top Agent Insight Survey from Q2.