Have you heard about pandemic house buying?
Public health strategies designed to deal with the pandemic have changed how businesses operate, changed jobs to work-from-home, and changed how many homes are available. It also has altered home buying in a few different ways.
What’s going on with home buying?
Whether it’s families trading a city residence with a suburbs home, or someone taking advantage of mortgage rates and refinancing or buying a second home, the surge in home interest is real. From 2019 to 2020, mortgage applications increased by about 20 percent, according to Mortgage Bankers Association data.
Beyond just the surge in home buying, there’s been a change in the way homes are purchased, too. Surveys from Redfin suggest that 2 out of every 3 homes purchased have been done virtually. This means that new owners never step foot on the property before buying the home. The reasons for virtual may be because of social distancing and regulations on in-person viewings. However, many people aren’t within reasonable driving distance and have no plans to change jobs for the move. We’ve learned that about 1/3 of jobs can be done remotely, according to the National Bureau of Economic Research. So moving away from a job’s location isn’t unreasonable anymore.
Plus, even though there’s an increase in home prices by almost 10 percent between November 2019 and November 2020, according to the S&P CoreLogic Case-Shiller National Home Price NSA Index, houses are selling about twice as fast after they list.
Pandemic home buying greed
Yeah, pandemic greed is a thing. Sounds morally awful to take financial advantage of a devastating situation, but not everyone boasts excellent character. Some home sellers are setting house prices way higher because of the current pandemic demand. The more homes that have a higher than fair value price, the more homeowners are tempted to sell, too. Unfortunately, the higher prices can make potential home buyers more cautious about buying now. And if there is too many over-priced homes sitting on the market? The price of housing will probably go back down.
Getting a fair price
So how do you know if the house price is extremely inflated, or if it’s a fair deal? Look at the sales history of the property and comparables in the neighborhood for years previous to 2020. This non-pandemic data will provide a better idea of the actual value of a home. Many experts don’t expect the current surge in price to stick in most markets. The pandemic home buying prices will settle back to previous trends after the pandemic is over.
It’s also important to check how much you can reasonably afford with an online mortgage calculator before starting the home search process. My advice is to buy less than you can afford, so you’ll have the financial ability to fix up the home the way you desire.
Lifestyle change
If you are really into making a big lifestyle change that’s even bigger than the city-to-suburbs switch, I’ve been hearing about the best states to start a farm or ranch. The highest ranking are Kentucky, Oklahoma, and North Dakota. And Hawaii, Rhode Island, and Connecticut rank as the worst. A brand called LawnStarter compared all of the states based on 44 metrics, including infrastructure, cost, and potential returns.
Has the pandemic affected the way you live or have you bought a new home during the pandemic? We’d love to know your story.
