The Pandemic Purchase.
Posted August 23, 2020 in Special Features
Written by Jeff Schaller
Regional Production Manager SW Washington/Oregon
Homebridge Financial Services, Inc.
Given our nation’s last pandemic was over 100 years ago, it’s safe to assume that each of us are navigating the choppy and unfamiliar waters of this crisis with a shared level of uncertainty.
Yet, it’s still a great time to purchase real estate. In fact, Fannie Mae’s “Home Purchase Sentiment Index” shows more than half of Americans agree that now is a good time to buy. With mortgage rates at their lowest levels in over 50 years, home buyers are able to stretch their dollar to afford a home that would have been out of their price only six months ago.
Consumer optimism, however, is a double-edged sword; home buyers may be able to afford more due to the lower interest rates, but inventory levels are uncharacteristically low due to the high demand. This creates a “seller’s market” and drives prices higher. Despite the higher prices, many argue a home buyer is better off paying a higher price for the home while getting a lower-than-normal interest rate – as opposed to the alternative (lower price and higher rate). Over the long-haul a homeowner will be much better served with the lower rate, albeit with a higher sales price. The numbers speak for themselves.
According to RMLS, Clark County has 1,161 total active listings which is enough inventory for only 1.2 months. In July there were a total of 939 closed sales with 18% of those being new construction. From March to May, we had a decline in new home sales versus resale. This is primarily due to the halt of construction as well as the closure of model homes during the stay at home order. Currently we are seeing new home sales increasing faster (rate of growth) than resale homes. This is due to the decline in our resale inventory. Today new homes represent almost 20% of all sales in the county.
Putting the financial piece aside for a moment, the road to homeownership is still a bumpy ride in today’s environment. With social distancing orders in place and Real Estate Professionals having to alter their processes, sellers are hesitant to have buyers in their homes, and signing final loan documents can prove to be something of a challenging process.
Every buyer and seller in today’s market has specific needs and challenges. It is critically important to make a connection with professionals who have a proven track record of success. Ask for referrals of real estate agents and loan officers from your network of trusted sources. Navigating today’s market with experienced and knowledgeable professionals will not only give you comfort and peace of mind but also the best outcome for your real estate transactions.