If you consider the economic impact of COVID-19, you wouldn’t think that people would buy a house. It’s just unlikely, with a large part of the population struck by job loss. But it turned out to be the opposite; the housing market boomed, and people rushed to buy a home.
Between September 2019 and September 2020, American homeowners accumulated a total of $1 trillion in additional home equity. Buyers took advantage of the lower mortgage rates, which cheapened the cost of buying a home. Indeed, mortgage rates, a.k.a. interests, fell dramatically in 2020 and reached a record low of 2.65% in January 2020.
The Effect of Lower Mortgage Rates
Obviously, lower mortgage rates make homes much more affordable, but if people’s income also decreased during the pandemic, how will they repay their loans?
The question isn’t really about people’s ability to buy, but what they could gain from the purchase. If someone bought a home pre-COVID-19 and paid $300,000 for it, for example, and the fixed interest is at 4%, they’d end up paying no less than $500,000 at the end of the term, usually after 30 years. However, if they bought the house in 2020, the interest would’ve been at just 3%, so they’d only pay an estimated $450,000, saving $50,000.
The reduced interest rates also prompted many families to move into bigger spaces because the pandemic revealed the limitations of their current homes. Two of those are office space and ample yard space. With work-from-home becoming the norm in 2020 and beyond, people fortunate enough to keep their jobs demanded proper workspaces. And if they have kids, they wanted them to play outside without risking their health, and only a spacious yard could allow them to do that.
What Made the Pandemic a Good Time to Buy
The pandemic has increased people’s demands from their spaces. But since there was a virus on the loose, cases were rising by the day, and the country fell into a recession, what people made a buy a house nonetheless?
For many home-buyers, waiting to buy was pointless. The virus wasn’t going away anytime soon. Even now, with the vaccines already available and being administered to Americans fast, new COVID-19 cases haven’t stopped coming. Hence, if people had major plans, such as buying a new home, they pushed through after holding off for a time. Waiting for the virus to be eradicated would take a while, and home prices could already rise by then.
And speaking of home prices, buying became much affordable, as discussed above. Even in cities where people were fleeing, the demand for housing was still healthy. Home-buyers just needed to be wary of looking into densely populated areas, where viral transmission was more likely to occur.
Overall, because 2020 and 2021 are uncertain times for everyone, no one could really tell when is the perfect time to buy a home. So people could either buy now and enjoy lower mortgage rates or wait for the virus’ eradication without a guarantee that mortgage rates would stay low.
Tips for Home-sellers
The surge in housing demand is favoring sellers. Thus, if you’re planning to sell your home, now may be the best time.
The lower interest rates will attract many buyers, and since you’ll be moving out, you yourself can also take advantage of the affordable home prices. If you’ve been looking for square footage, extra rooms for an office space or home-based business, and a healthier environment, you can get all those for less.
Putting up your home for sale with the help of an experienced realtor so that you can find a serious buyer fast. With their professional assistance, it can only take minutes for a buyer to make an offer. And for you to be able to find a new place just as fast, work with the same realtor. Buying and selling a home may not go smoothly for everyone, but if you know your way around the market, you close transactions with minimal hassle.
Moreover, the supply of homes isn’t big these days. So if a buyer sees your home and likes it, chances are they’d make a bid right away. If other buyers are looking into your place, they might also be aggressive with their bids. So this your chance to earn a good profit from your home, and be aggressive yourself while you’re buying a new abode.
We’re currently living in unprecedented times, so we’re all encouraged to grab every opportunity to improve our lives and grow our income. Luckily, nearly 50% of Americans are now vaccinated against COVID-19, so herd immunity is getting closer to our reach. What are we waiting for then? If we can buy or sell a house now, let’s get on with it right away.