The coronavirus pandemic has brought unprecedented disruption to the state’s housing market, and many buyers could be tempted to wait for more certainty.
Prior to the COVID-19 emergency, the housing market was in full swing with low mortgage rates and an influx of cash buyers ready to bid. According to the National Association of Realtors, existing-home sales saw a 7.2 percent increase from February 2019 to February 2020; and new-home sales increased 14.3 percent year over year for the same window, according to a joint report from the U.S. Census Bureau and Department of Housing and Urban Development. The state of the market kept prices up and properties flew off the market.
Today, in the midst of the coronavirus emergency, the residential real estate market has been turned upside–down; while there are still many property listings in-market and mortgage rates are still at record lows, there are fewer people willing – and qualified – to make offers.
Those who were in the middle of the home-buying process may no longer be able to move forward for a variety of reasons.
First, many Americans have lost their jobs or been furloughed due to COVID-19. Without their anticipated monthly income, it likely wouldn’t make sense to take on a mortgage – and unfortunately, they may no longer be qualified to do so.
Second, if the purchaser had invested the money they were using for the down payment, they may no longer have the funds needed to move forward due to the current volatility of the stock market.
Third, real estate transactions are linked together. If the purchaser can’t sell their existing property due to the reasons outlined above, they likely won’t be able to move on and purchase a new property.
Many Uncertainties in the Market
In addition to financial impacts, there are other considerations that influence the mortgage market. While it was once considered exciting and enriching to live within or close to a metropolitan area, some individuals and families may reconsider purchasing in a city, especially without a cure or vaccine for COVID-19 in the short-term. Many will forgo city living for safety reasons and pursue a home in the suburbs where there is more space for social distancing. The benefits of city living could also become moot if theaters, restaurants and job sites remain closed for the foreseeable future. This could also create a shift in property values with suburban prices rising faster than prices of homes in the city.
Another possibility is that the housing market could stall and demand in the rental market could increase due to the overall economic uncertainty in the country. Many people might hold off on purchasing and turn to a rental while they wait for a vaccine and more clarity on what the future holds. It’s difficult to make monumental life decisions, such as a home purchase, when we don’t have answers on what the next year – or even six months – will look like for the country.
At Metro Credit Union, we understand that many of our members are experiencing challenging times due to the pandemic. We want to help them through the entire process – whatever that might mean for them.
If they are moving forward with purchasing a home, we are here to help with our first-time home buyer program, education programs and home-buying seminars that are being conducting virtually during this time. If our members have decided not to move forward with buying a home, but might need a home equity loan or to refinance their mortgage, we’re here to assist with that as well. We’re also finding that some of our members are taking this time to reset financially, hunker down and get their financial house in order.
That’s what we do best at Metro Credit Union – create and foster meaningful relationships, help our members figure out what is best for them and guide them toward making the best financial decisions for their future.
Robert Cashman is president and CEO of Chelsea-based Metro Credit Union.
