Home Buying Tips 2020
A Buyer’s Guide During COVID 19
Potential homebuyers have been reacting to mixed signals on the market. COVID 19 has hit the pause button on the global economy since March 2020. Leading economist are warning of a deep dive in the economy for the second quarter of this year. Experts are saying the American economy is heading towards a recession, if it’s not already in one. This may put a lot of doubts in potential home buyer’s minds, thinking that we may head in the direction of a housing crash.
Is it time to buy in order to take full advantage of a slower real estate market? Or is it wiser to hold off on any purchases until the economy is back in gear?
As I have demonstrated in a previous article, housing market and stock market value fluctuations are not directly correlated, except during 2008. In the following graph, you will see the home price change during the last five recessions do not necessarily impact home values.
Housing market and stock market value fluctuations are not directly correlated.
What we are approaching may be a recession, especially for the traveling, hospitality, and transportation industries. However, in the eyes of leading economists, neither the housing sector nor the lending industry have been a front runner of any potential recession.
One of the main reasons why, is because the housing sector is entering this coronavirus recession under-built rather than over-built. The demand-and-supply supports a healthy housing shortage, meaning as the economy rebounds, which we will certainly experience at some point, the housing sector will help lead the way out.
The housing sector is entering this coronavirus recession under-built rather than over-built.
As a buyer, as long as you have a stable source of income, I’m here to encourage you to stick by your home search criteria and look for the dream home that you are going to love for years to come. Do not be swayed by noise on the streets. People always need somewhere to live. If you will need to buy a home, consider taking advantage of this period of historically low interest rates. Of course, all of these actions are based on you having a healthy source of income — I will never advocate for anyone to overstretch themselves.
Consider taking advantage of this period of historically low interest rates.
As we are all experiencing COVID-19, be sure to use health and safety precautions if you are touring homes. Wear face masks, do not touch anything, use shoe booties, and use hand sanitizer. Also, be sure your real estate agent is having you sign the PEAD form, Coronavirus Property Entry Advisory and Declaration, to make sure you are legally protected and allowed to be shown homes. Don’t forget to also utilize online virtual resources when you are home shopping, and perhaps, now that we have all experienced shelter at home, you can place more emphasis on looking for a home with an office and an outdoor living space, since we now know those have become the most critical parts during a lockdown.
Place more emphasis on looking for a home with an office and an outdoor living space.
I have always advocated for long-term strategic financial investments. Regardless of where the market will head in the upcoming 6 to 12 months, it is always wise to stand by your long-term strategy. No one has a crystal ball, but as long as you’re conservative in your expenses, you have enough liquidity on hand to satisfy immediate needs, you will be well served in the long run.
About the Author
Danny Lau has set up several successful small businesses, he is a top real estate sales professional, and he shares real estate investment advices through his YouTube Channel.
This article is intended for informational purposes only and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.