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Buying a Home During a Pandemic4/7/2020

Couple standing in front of their new homeYou’ve spent years preparing for this moment – you’re ready to buy your first home. But now that the coronavirus has threatened the economy, you’re probably asking yourself: “Is it a good idea to buy a home during a pandemic?”

The coronavirus outbreak has given rise to dozens of financial questions, and the uncertainty has confused the average American and financial experts alike. With little certainty as to the end of this pandemic and the lasting impact it will have, experts can only look past economic crises to try and predict the short-term and long-term financial future of the United States.

Let’s consider the current, mid-pandemic housing market and explore the wisdom of buying a home during a time of economic instability.

In a twisted irony, February 2020 home sales were the strongest in the country since 2007, reaching 5 million sales. The two leading factors: falling interest rates and a booming economy. But just two months later, experts have already noted a decline in the buying trend. The downturn is likely an effect of the economic devastation caused by the outbreak, which has threatened millions of individuals with job insecurity.

The decrease in home sales is also likely due to other practical reasons. In a time when people are worried about their health and are trying their best to maintain a normal life while confined to their homes, it’s difficult to consider purchasing a new one. Meeting with potential sellers and real estate agents also presents a challenge while practicing social distancing.

While no one can predict when the spread of the coronavirus will ease, the market may see an increase in sales when it does.

A dwindling housing market does not automatically mean this isn’t the time to buy your first home. In fact, times of financial uncertainty have led to lower mortgage rates and easier qualifications for credit. However, a favorable mortgage rate isn’t enough to make a home purchase a good idea.

Some experts believe the pandemic will cause a spike in home sales as consumers, fearing another recession, will realize the stability and control of homeownership. A fixed-rate mortgage can be an attractive option as it will not be subject to the peaks and valleys of a volatile national interest rate and can help the owner feel secure if job loss and unemployment become the norm.

Before you’re ready to jump into buying a home, consider the following factors:

  • How stable is your income? If you have reason to believe you might be facing a layoff, now might not be a good time. You will have to make mortgage payments, regardless of your employment status.
  • How long do you plan on living in this home? If you anticipate staying long-term, now could be the time to take advantage of low interest rates; if you plan to sell in the next few years, you may come out at a loss due to a falling housing market and unstable economy.
  • Will you have savings left after making your purchase? As the probability of a recession continues to grow, now is not the best time to be without a savings cushion.

The coronavirus outbreak has, undoubtedly, shaken the lives of everyone, from vacation to weddings, parties, and more. That doesn’t mean your dreams of buying a home must be put on hold. If you can comfortably afford the purchase and the economic instability doesn’t threaten your income, the favorable interest rates and easier qualifications could make this a great time to find your first home.

Our First South Financial mortgage loan officers are here to help you every step of the way. Give us a call at 901-380-7530 or start your application online today

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