Newly constructed residential properties are out. During this pandemic, previously owned properties are in. Well, at least for the time being.
The pandemic has not only affected the lives of people. It also affected economic trends, including the housing market. According to news reports, previously owned home contracts are high for seven months in August. Prices may be high, but their growth has been paralyzing the new housing market for a while now.
And it looks like it’s not stopping any time soon. But, apart from this, home loan applications decreased as mortgage rates also increased. Due to supply limitations, housing prices in the market go way up high. This, in turn, discourages buyers from buying newly constructed properties.
Data also shows that single-family sales dropped to 1.9%, while condominium sales went as low as 2.8%. According to reports, this may be attributed to the attitude changes of consumers. Consumer activities have been greatly affected by the pandemic struggles. The number of residential projects that have been approved but not yet started has also increased, as reported by the Commerce Department. This shows that even construction companies are hesitant to start new projects given the supply and demand situation.
The main question now for house buyers is: Is it wise to buy a new house in the middle of a pandemic? Should you wait a little longer until the economy gets better? Should you wait until the housing market goes back to its usual trends? Or should you grab the opportunity to buy previously owned residential properties at a lower price?
Here are some things to think about when deciding about buying houses these days:
· You might want to resell your existing property before buying another. If you are starting a family and need to get a place as soon as possible, what could be the best strategy for buying properties amid the pandemic?
If you plan on buying a new house, you might as well sell an existing property. This will compensate for the high price of newly constructed homes in the market. This will give you the luxury of buying a new house even in this unfavorable house market. Well, that is if you have an existing property.
This strategy will also work for investment properties. If you are a businessman and want to buy investment properties, the 1031 exchange policy will save you from capital gains taxes. This policy is stated in Section 1031 of the U.S. Internal Revenue Code, which exempts a buyer from capital gains taxes when selling an investment property of the same type or value. These include apartments, storage facilities, restaurants, and other business establishments.
· Assess mortgage offers.
You might still want to buy a new property and apply for a mortgage loan. The usual mortgage rates go from 3.5% to 20%. An ideal setup would be to lay down a higher down payment so you’ll pay a lesser amount and interest over the years. This will also impress your mortgage broker and assess you as a low-risk candidate. Thus, the lender will keep from imposing other charges on you. It is also better to be approved so you wouldn’t have to submit other loan requirements.
· Determine your present needs.
Do you need a house right now, or can it wait a little longer? Is it your goal right now to get your dream house for your family? Or are you okay with any shelter as long as you have one? Are your finances enough to get a new home even if the prices are higher during the pandemic?
It all depends on your current needs and priorities. It also depends on your finances right now. Whatever works for you will determine the best decision for your property concerns. It might help to discuss these with a mortgage broker or a financial consultant to assess your current financial situation. You may also ask for loan quotations to determine if you have enough to pay for a mortgage in the coming years.
Whether it is the best time to buy a house depends on you. Even if the prices are higher in the market, it is up to you as long as you are financially capable. Just a piece of advice, though. The pandemic is still not over, and you might want to be able to save enough for emergencies. So if you’re planning to buy a house, be sure that what you’re going to get is enough. Be sure that you wouldn’t splurge and that you’d still have some to keep for the rainy day.