Is now the right time to buy a home?
Usually, April comes around and the time known as “home-buying season” begins. Homes start going on the market, people explore new neighbourhoods and flock to open houses, bidding wars start, and moving vans become a familiar curbside sight.
This year has been different.
When COVID-19 was declared a pandemic, there was suddenly a lot of change in our lives. When it comes to buying a new home, let’s take a look at three changes in particular:
- Interest rates dropped to near-historic lows.
- Home sales went down.
- Social distancing measures resulted in more people staying at home than ever before.
Mortgage rates during COVID-19
When rates drop, a lot of home buyers (especially first-time home buyers) use it as an opportunity to lock in a low mortgage rate. Does this mean that this is the best time for you to get a mortgage and buy a home? The short answer is: maybe. We’ll circle back to that.
One thing to keep in mind about low mortgage rates is, even if you’re not quite ready to buy, you can capitalize on this opportunity by getting a pre-approval from a lender for a particular mortgage and rate. It’s not a guaranteed mortgage approval, but it’s a great way to lock in a low rate for up to three months (four months for new builds).
Homes sales during COVID-19
Getting the right mortgage is one key aspect of buying a home – another is, of course, finding the right place. One big consequence of COVID-19 has been that there are far fewer homes on the market than there usually are this time of year, and fewer sales – plus, home prices is some areas continue to go up. There are numerous reasons for these trends. For example, a lot of people have lost income due to COVID-19. So some potential sellers are holding onto their home for now, and some potential buyers have put off looking for a home until their finances are more stable.
So if you’re looking for a new home right now, here are a few things to consider:
- With fewer people selling, there are fewer options out there for potential buyers,
- With supply and demand staying pretty level, there won’t be a big drop or big increase in prices unless something changes. However;
- With fewer people buying, sellers might be more likely to negotiate on price, depending on their own finances and circumstances.
House hunting during COVID-19
Let’s say that you’ve taken a look your financial situation and the housing market in the area you want to live in and you’ve decided you want to buy. You might be wondering what to expect when it comes to house-hunting in the age of COVID-19.
Naturally, social distancing and public safety have had an effect on how realtors and homeowners are selling. Looking at a new home isn’t impossible, it’s just a little different. Here are a few things to expect:
Not picture perfect
Before the pandemic you could often expect homes on the market to be professionally staged. Pretty, polished, colour-coordinated. Depending on how long a house has been on the market you may still see some of that, but not always. After all, extra people coming in and out of a property is now a matter of safety.
Virtual tours and meetings
Like many of us, a lot of realtors are working at home now. This means video calls and phone chats rather than in-person meetings. Many realtors are also using technology like 360° virtual tours to show properties.
Do your research
Remember the days when you could swing by an open house on a summer weekend, just out of curiosity? Not an option right now. Before asking to see a property in person, be considerate and do your own research: take a drive around the neighbourhood; check out local schools, shopping, and services online; and take a close look at any images or virtual tours available.
Health and safety
Generally, realtors are doing walk-throughs by appointment and everyone is expected to wear a mask and gloves. You’ll also be asked to avoid touching anything in the home – this is one of the reasons why realtors may ask you not to bring small kids along.
So what should you do?
There’s no magic answer to whether right now if the right time for you to get a mortgage and buy a home. The current state of mortgage rates and the housing market might present a good opportunity – but it all depends on your personal finances and situation. You can start by making sure you understand how much you can afford and what kind of mortgage would work for you.
Also, personalized advice is key – talk to one of our expert mortgage advisors.