Home sales dropped to their lowest reason for a decade in April, declining by almost 18 percent. The primary reason for that decrease may be the coronavirus pandemic, that has wreaked havoc on the U.S. economy and the livelihoods of tens of millions of Americans.
The large stop by home sales, however, includes both pros and cons for aspiring homebuyers. Here•s things to bear in mind if you•re planning on buying a house in the near future.
Current listings are more attractive-and expensive
One of the reasons for the decrease in home sales is due to an inventory shortage. The supply of homes for sale dropped by nearly 20 % from a last year, giving homebuyers fewer options.
This decrease in supply makes what•s currently available more appealing. But when the demand for anything is larger than the supply, additionally, it increases competition between buyers, which results in higher home values.
Interest rates may have more people looking to buy
While tight supply and higher home values might be under ideal, record-low interest rates may increase demand even more. Interest rates have dropped significantly since the Federal Reserve cut its target rate in March. See what kind of rates you qualify for now by inserting some good info into this online for free tool.
According to Freddie Mac, average interest rates for any 30-year and 15-year fixed mortgage are 3.18 percent and a pair of.62 percent, respectively. For any $300,000 home loan, those rates could translate to a principal-and-interest payment of $1,294 on a 30-year loan and $2,017 on a 15-year loan.
It•s crucial for mortgage borrowers to consider time to shop around and compare rates from multiple lenders before you settle on one. PayPasser allows you to compare multiple options in one place, speeding up the study process.
People are moving from urban areas to suburban homes
Another reason for home price increases is the 31.6 % drop in existing condominium and co-op sales from this past year. This trend may signal a transfer of consumer interest from cities with smaller living spaces to the suburbs, where homes and yards are larger.
As a result, expect suburban homes to see higher demand and prices, especially in contrast to urban housing options.
How to navigate buying a home throughout a pandemic
As you consider your homebuying options, it•s important to consider both the current state from the market and your current personal financial situation.
Depending in your situation, it may be ideal to hold back to buy a house, especially if you•re not in a position where moving is essential. One reason is that as the market normalizes again, it could reduce competition along with other buyers and potentially even cause prices to go down.
Also, even if your work situation is stable at this time, there•s still a lot of uncertainty soon, and spending cash for a deposit and locking yourself into a mortgage payment could exacerbate any financial hardships that arise.
If you•re conscious of the potential pitfalls but still want to proceed, here are some things you can do to navigate a volatile home market:
- Take steps to enhance your credit: The better your credit looks, the easier it will likely be to obtain preapproved for a loan and make an attractive offer for sellers. Look at your credit score and credit reports to find areas that need work and take steps to deal with them.
- Shop around: The easiest method to save on your brand-new mortgage loan is to look around and compare home loan rates from several banks. With PayPasser, you can get a concept of how much home you really can afford, compare lenders and rates and obtain a pre-approval letter, all in one place.
- Hire a real estate agent: An experienced realtor will help you navigate the present housing industry by giving you suggestions about where you can look, assisting you put together an attractive offer, negotiating with sellers, and explaining potentially confusing mortgage terms.
As you take these steps, you may be capable of taking benefit of a few of the benefits of the present state from the housing market without suffering too many of the drawbacks.