We often receive questions about whether this is the right time to buy, considering COVID-19 has hung around longer than expected. It’s understandable—both buyers and sellers are worried about making a move right now. However, for those in a good position to buy or sell, the timing is very good. Here’s why.
Through our monthly market report, our Homes and Lakeshore team provides data on Otter Tail County real estate. This includes sales information from our own multiple listing service, as well as data from national players like Zillow and BankRate.
What we are seeing is a stable market. Home prices have seen a very slight decrease, but for the most part are holding steady. Low inventory has decreased competition for sellers. If your property is priced appropriately, it will likely sell promptly.
Even though home prices are a bit higher than a few years ago, buyers are able to more than make up for this difference with incredibly low interest rates.
This makes it an unusually good time in the market for both buyers and sellers. There is one caveat: You should be in a stable position to make either transaction.
About the Economy
According to Pew Research, public opinion around the globe is optimistic regarding prompt economic recovery from COVID-19. Expert predictions from economists remain optimistic as well. In June 2020, the International Monetary Fund downwardly adjusted the 2020 growth of Gross Domestic Product (GDP) to be 4.9%. The IMF estimates GDP to grow 5.4% in 2021. The entity is not predicting a recession like in 2008.
Evaluating your position
One factor, whether buying, or selling and moving on to a new place, is your job or retirement stability.
If you are working in a stable industry with a low likelihood of a COVID-19 layoff, buying a home may be a wise choice. Similarly, if you have a balanced retirement portfolio and can ride out the stock market blips, you are likely in a pretty stable position as well.
Then, it can be a matter of finding a home you like that suits your needs.
While U.S. unemployment was still a high of 8.4% in August, nonfarm payroll employment rose by 1.4 million. According to the U.S. Bureau of Labor Statistics, “these improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it.”
There are some sectors of the community and certain industries that may continue to see some hardships, such as the leisure and hospitality industry. Meanwhile, technology, hardware and grocery stores are flourishing.
High unemployment can actually be a benefit to those with a stable job because there is less competition for homes.
Investors may see an opportunity too. Even though the government is using the Cares Act to support Americans by deferring mortgage payments, providing stimulus payments and other relief, many Americans may choose to walk away from their properties, increasing short sales and foreclosures.
Proceed with Caution
We can read the market and interpret statistics, but unfortunately do not have a crystal ball. We always advise buyers spend what they can truly afford on a home, not how much you qualify for. This may be a good time to be a bit conservative in your spending.
Also, look for a property where you can build value. This may include a home in a desirable area that you can improve over time.
For those that are selling and have not yet purchased your next home, you may want to look at the market where you are moving, see how many homes are available and at what price.
The Long Term
Unless you are an investor experienced in flipping homes, buying a house is typically considered a long-term investment. Expect to stay in your first home a minimum of five years, and move up homes or a property to enjoy during retirement even longer.
We would be happy to discuss the market and your particular needs. Navigating real estate in the time of COVID-19 is not easy, and we are here to help!