The coronavirus pandemic has changed many aspects of daily life, and the real estate market is no exception. COVID-19 has introduced some challenges into the home buying process, but they can be navigated. With mortgage rates currently at historic lows, many homebuyers and sellers are not letting the pandemic stand in their way. If you’re one of them, let’s take a look at some of the things to keep in mind during this unique home buying season.
Considerations for Selling Your Home
According to an April 2020 study by the National Association of Realtors, 90% of realtors surveyed have observed a decline in buyer interest during the pandemic. A decrease in interested homebuyers could result in a home taking longer to sell, or it selling at a lower price. However, a lower inventory of homes on the market could make up for a decline in buyer interest. In other words, if fewer homes are available for sale, yours could end up selling quickly and close to asking price. This appears to be the case locally. In Massachusetts, for example, there were 38% fewer homes for sale in April 2020 than there were in April 2019, and the average home sold for 99% of its asking price, compared to 97% of homes last April. Likewise, Rhode Island saw a 32% drop in the number of homes for sale in April 2020, compared with April 2019. Although recent trends appear favorable for sellers in Massachusetts and Rhode Island, it’s a good idea to speak with a realtor prior to listing your home, so you can better understand how COVID-19 is impacting the real estate market in your own neighborhood.
Showing Your Home
While open houses and in-person home showings are currently permitted in Massachusetts and Rhode Island, they are restricted by capacity limits. Many homebuyers may also be hesitant to view a home in person even though the law allows it. For this reason, it could be beneficial to provide a video walkthrough of your home so potential buyers can view it online. A seller should also make any safety requests known to buyers before they visit the home. For example, let them know if you will be requiring them to wear masks or gloves, use hand sanitizer or submit to a temperature check before entering your home, or if you’d like them to avoid touching things during the visit. A cautious seller might want to open all doors themselves, including closets, before a prospective buyer arrives so that buyers are not tempted to touch door handles to look inside.
Considerations for Buying a Home
Qualifying for a Mortgage
While some areas of the U.S. have experienced a drop in home prices due to the Coronavirus pandemic, median home prices in Massachusetts and Rhode Island have actually increased since last year. High average home prices and stricter lending requirements can create a challenge for buyers, especially those who have had their job hours or salaries cut during the pandemic. So, even though mortgage rates are currently at historic lows, many borrowers could have trouble qualifying for a mortgage if their credit scores are borderline or if they can only make a small down payment.
COVID-19 can also present challenges during the home inspection phase. Many home inspectors in Massachusetts and Rhode Island are now limiting the number of people who can be present during the inspection. In some cases, the home inspector may wish to conduct the inspection alone and provide reports, photos, and videos to the buyer afterwards. And, as of July 1, 2020, all home inspections in Rhode Island must be conducted by an inspector who is licensed in the state. Rhode Island buyers can check if their home inspector is licensed in the state by visiting http://www.crb.ri.gov/ and clicking the “Search Registrant and Licensee Listings” link. Regardless of which state you live in, as a buyer you should check with your home inspector beforehand to understand how the inspection will be conducted so that you’re comfortable with the process. Also, make sure there will be time following the inspection for you to ask questions, whether it be done in-person or over the phone.
Considerations for Both Buyers and Sellers
Longer Closing Process
Both buyers and sellers should be prepared for a slower home buying process. Mortgage loan officers, escrow agents, appraisers, and attorneys may not be working the same hours as they did pre-pandemic, and they’re also likely to be working through a large volume of refinances, given current mortgage rates. Changes to hours at city clerk's offices could also delay necessary deed filings. In some cases home closings may also need to be modified to allow for social distancing.
Despite all of the challenges the Coronavirus pandemic has brought to the real estate market, many buyers and sellers are forging ahead to get into the homes of their dreams. The good news is that if you really want to, or need to, buy or sell a home during COVID-19, you can still do so with a little patience and flexibility.