There are many mixed messages regarding COVID-19 and the housing market. It is unfortunate that this also happened to fall right during the spring market, which is usually the largest market of the year for buying and selling. One of the common misconceptions right now is the housing market is crashing and the price of homes will be significantly decreasing. I am happy to say that this is not true, especially in the Triangle area. With that being said there are a few things to keep in mind.
1.) It is harder to obtain a loan. Many lenders have stopped and/or are limiting specific loan programs, especially government loans.
- FHA Loans are a government-backed loan program that allows for a lower credit score and lower down payment than some conventional loans. Credit scores could be as low as 580 and down payments as low as 3.5% of the purchase price. Most lenders have upped the credit score limit to at least 640 for the time being.
- VA loans are a loan program for veterans. Some lenders are requiring credit score minimums to be higher than previously required and that score would depend on the specific lender’s requirements.
- Down payment assistance programs have stopped. In North Carolina you can qualify for up to $8,000 towards your down payment with some income and credit score requirements but lenders have recently pulled this program due to the pandemic.
- Jumbo Loans which in NC are currently loans that require more than $453,100 in financing have recently upped their credit score limits and down payment amounts.
2.) Inventory is limited. In what would normally be a booming spring market the number of houses that are being listed is limited due to a few factors. Some sellers may be hesitant to open their homes due to the risk of Covid-19 exposure. Some sellers also may be hesitant to sell due to uncertainty in the future economy.
3.) Any financial troubles that have occurred due to recent issues with the economy. Many Americans have been laid off or their jobs have been furloughed. Many others have lost investments in the stock markets, from 401ks and more. This may affect the ability of some to purchase.
1.) Interest rates!!! Interest rates have dropped significantly recently and are currently historically low. Some rates have even been as low as the high 2%s!! The lower your rate, the more buying power you have. In fact, with each 0.125% change in mortgage rates, your buying power can increase. Now is a great time to lock in a low rate for anything from your first home to an investment property.
2.)There are fewer buyers in the market which would mean less competition. Some buyers may be hesitant to enter homes due to the risk of exposure. Also the sellers who are listing their homes on the market are serious and motivated to sell.
3.) The market is cyclical meaning that when it goes down it will eventually always go back up. if owning this home is your long term plan then regardless of what happens with the market in the very near future the value will increase over time. The good thing about land is that there is no more being built so the value of land never depreciates.