COVID-19 and Real Estate
Volatility is our new normal……. for now.
There’s no doubt that COVID-19 has been devastating and heartbreaking for us all. Many have lost lives, loved ones, jobs, businesses, money, and sleep over the current pandemic. Little knowledge on the virus creates fear in the eyes of many. Can you even remember the last time you went a day without talking or hearing about coronavirus? Now focusing on the positive has almost become a chore rather than something that just comes naturally throughout the day. One thing important to remember is that as a global economy, we went into 2020 very strong. You may be surprised to learn that I am actually hopeful about real estate in the Nashville market, and I’ll tell you why.
Now may be the perfect storm for buyers. Let me explain in three points:
Low interest rates
Buyer competition has slowed
Nerves from sellers
Let’s take a look at interest rates. In early March we saw mortgage rates hit an all time low at an average of 3.29% for 30 year fixed loan and even lower on a 15 year. Lack of knowledge on the virus, keeps our market volatile. If history has taught us anything on past outbreaks, (specifically swine flu, avian flu, or SARS) we can expect to see the market start to bounce back anywhere between 3-6 months. That means we can expect the second half of 2020 to be much stronger than the first. When the market does start to bounce back, anticipate a rise in mortgage rates.
Secondly, if you have cash or the ability to get financing, now may be a great opportunity for you to buy. Instability creates hesitation, especially when it revolves around large purchases, such as a home. On the flip-side, fewer buyers equals less competition, and less competition means the opportunity to negotiate a better deal! In some markets, (example - New York) homes have recently sold less than their asking price, some as much as 25% less!
This brings me to my last point - sellers may become a little nervous. Homes that were in the process of being listed, or homes that don’t have to sell right now, may have backed out for the time being. On the contrary, sellers that must sell, may start to feel pressure and nerves as their home potentially sits on the market longer than they had planned. Open houses and showings have slowed down dramatically, and listings are getting less attention than they would in a healthy market. As a buyer, this can be a positive opportunity for you! Let your agent help you find opportunities for negotiations. Sellers may be willing to accept an offer that they would not have considered previously.
Ending on a positive note, remember that the US economy is the largest in the world, and the most resilient. We will get through this. Even in negative situations, there’s room for great opportunity! Stay safe, healthy, and inside.
Laura Grace
