POST WRITTEN BY Beatrice de Jong
Americans spend more on housing than anything else. When making one of the biggest financial decisions of your life, it’s smart to weigh your options, understand current market conditions and arm yourself with the right information. This has always been true when it comes to buying or selling homes, and in today’s landscape, it’s even more important.
COVID-19 has impacted nearly every industry in America, and the real estate market has experienced a series of notable changes. While there’s a wealth of information available online about financing, buying opportunities and selling a home in the current climate, not all of it is accurate. Here are the five most common real estate myths I’ve been hearing from clients on a regular basis, along with what you should know about each.
Myth No. 1: There’s less competition when buying a home.
You may be inclined to think that while people are forced to stay home, pausing their plans and putting major life changes on hold, buying a home is a less competitive experience. However, with motivating factors like lower interest rates, there’s been a slight increase in buyer demand. Plus, buyers who are shopping for homes are more likely financially secure and able to make stronger offers.
Many current homeowners are also looking to capitalize on low mortgage rates and opting to refinance their homes. This has overwhelmed lenders and slowed down the average closing time. If you’re looking to buy a home now, it’s a good idea to build flexibility into your timeline. I recommend getting preapproved before home shopping to have a clear idea of what you can afford, and working with your lender early to shorten the time frame and avoid delays in the closing process. This can also help your offer stand out among others.
Myth No. 2: People aren't selling their homes during the pandemic.
While recent industry data suggests that 77% of potential home sellers are planning to sell their properties following the end of stay-at-home orders, many people don’t want to wait. And with safer self-service options becoming more available, more sellers could start re-entering the market sooner. Realtor.com found year-over-year declines in new listings are continuing to improve, only down 20% with more sellers returning to the market.
Myth No. 3: The economy is going to crash, and with it, the real estate market.
While we don’t know the full effects of this crisis yet, it’s clear that the real estate market is in a much better place than it was in 2008. In the 2008 housing crisis, the popularity of subprime loans resulted in an influx of homebuyers who purchased homes with very little money down. In this instance, losing even a slight amount of value on the home meant those homeowners were underwater.
Today, it’s common practice for homebuyers to put 20% of a home price down, so they immediately have equity built up in their property investment. Even if a homeowner had to sell their home during an emergency — such as unexpectedly losing their job or suddenly needing to relocate — they would likely still be able to walk away with cash in their pocket.
Myth No. 4: Home prices have dropped dramatically.
Though I’ve heard a lot of conversation about buyers waiting for home prices to drop, it hasn’t been the case. Expecting to see a dramatic change isn’t realistic, either. People will always need homes to live in, and as long as there is demand, prices will remain or slightly increase, especially in cities like Los Angeles, San Francisco and New York City. Overall, whether home prices increase or decrease will vary market to market, but I don’t predict a drastic change either way anytime soon.
Myth No. 5: It’s unwise to buy a home without visiting it in person first.
It may seem strange to think about buying a home without ever stepping inside of it, but technology has made it possible to get a true sense of a space. And, with health and safety top of mind for home shoppers, the real estate industry has innovated new ways to visit and buy homes safely. Requests for Facebook chats, Zoom home tours and other digital visits are all on the rise, with 25% more people taking virtual tours than before, and a 41% increase in remote communication with agents.
In addition to taking a digital or self-tour, it’s a smart idea to request photos that showcase different angles of rooms and floor plans with dimensions, and to ask questions about the neighborhood and local community. Buyers can also use Google Maps to see the home’s surrounding area.
Whether you’re buying or selling a home, it’s wise to educate yourself on current housing trends and information, but make sure it’s accurate and up to date. Real estate is cyclical, and having a solid understanding of what’s happening will help you make the best possible decision for yourself and your family.