As we enter the second month of the COVID-19 pandemic in the United States and a few weeks into our stay at home directives in Montana, life is starting to feel like we’re entering a new normal. People are adjusting to working from home, kids are learning remotely and the stores have restocked on toilet paper. Of course, there are still many unknowns during this time, how long it will last, will the economy recover, should you still consider making a big decision like buying or selling your home? While we don’t have the answers to those questions, experts believe that real estate has certainly changed in the last few weeks, but it has not stopped and it will come back strong.
With the economy in turmoil, there is a real concern about a global recession. However, it’s important to remember a recession does not mean the housing market will crash. In the last four recessions, residential real estate has only depreciated once (Houseloanblog.net). Right now looks very different than the housing crisis of 2008. Subprime mortgage lending and excessive risk-taking in the financial industry were huge contributors to the crash of 2008, and neither of those are present currently. Market conditions have been much different this time as are the issues causing it. Experts believe real estate can handle this storm and will recover quickly rather than the slow recovery process of the Great Recession.
Selling a Home During a Down Market
While real estate is not operating in a traditional manner, agents are still working. With more people working remotely, everyone is on their computers and phones more than usual, which means real estate websites are getting viewed! You may be considering waiting for things to calm down to put your home on the market, but with so many people online your house might get seen more. Currently, the majority of listings have virtual tours, video walkthroughs or options of Facetime tours. These are great ways to view homes, however, most people will want to physically see the home prior to making an offer. This means that as soon as things return to normal there will be a lot of buyers ready to make a move. Buyers will have done extensive research online on particular homes and will be ready to take the next step, so you want your home to be a contender. Some sellers may have concerns about days on the market, but in the current conditions, people understand why this number may be higher than usual. Another valid concern is that you may have to price your home lower in a down market. While this is true, Bozeman is coming into this with high home prices so slightly lower asking prices are not going to hurt as much.
Buying a Home During a Down Market
For buyers, mortgage rates are nearing record lows. The Federal Reserve has been working to stabilize the mortgage market by buying treasury bonds and mortgage-backed securities to help push the rates to the current lows (Yahoo Finance). This makes it an ideal time for homebuyers to take advantage of these low rates and to purchase a new home. During a down market, homes tend to sell for lower prices. Sellers may be more likely to negotiate and you won't see as many multiple offer situations like we have been seeing in our real estate market in Bozeman. While some sellers can wait for things to calm down to list their house to increase their chance of getting full-price offers, many don’t have a choice. They may have a job transfer, family circumstances or financial reasons they need to sell in this down market. Things have shifted to a buyers’ market, but it is unlikely to last once things return to normal.
Bozeman entered this slow down with a very strong real estate market and we were getting ready to enter the busy season. Things all but stopped while agents, mortgage lenders, title companies and banks scrambled to adjust to all the changes in the industry. A few weeks in, we are seeing everyone finding new and innovative ways to continue real estate transactions. As a community, Bozeman has always been strong supporters of local businesses and helping each other out and this is all the more evident right now. If you have questions about real estate during times of COVID-19, we have been working hard to come up with answers...