The arrival of autumn typically coincides with a slowdown in the real estate market, but there is nothing typical about 2020. In fact, it appears the home-shopping season will extend into the late summer and possibly even into the fall this year.
Consumer uncertainty and economic turmoil have made homeownership an impossibility for some, but the pandemic hasn’t stopped others from buying homes. According to Zillow, new pending home sales were up 16.5 percent the week of August 22, when compared with the same week last year.
Assessing the state of the real estate market will not answer the question of whether or not now is the right time for you to buy a home. That answer will depend on your specific circumstances. Read on to determine if you should consider buying a home this year.
Why It Might Be a Good Time for You to Buy
If you’re financially secure and ready to join the ranks of homeowners, now might be the perfect time to buy. Mortgage interest rates are at historic lows, which could save you thousands of dollars over the life of your loan.
Plus, if you’ve shifted to remote work, your home is arguably more important than ever. An increasing number of people across the country are now working out of their homes as a result of the pandemic, and many could use a little extra space for a home office. If you will be working from home for an extended period, you don’t have to restrict your options to the city where you work—you can browse listings across the country.
During a typical year, the home-shopping season surges during the spring and summer months, in part so families can be settled in by the time school starts, but if your children are learning remotely right now, you might be more flexible about when you move.
And while many people are busier than ever, those who have had to cancel planned vacations or work trips might have some extra time to browse listings online. Widespread virtual tours have arguably made it easier than ever to explore homes in a variety of locations without even getting into your car.
Why It Might Not Be a Good Time for You to Buy
It’s impossible to sugarcoat the one-two punch of a pandemic followed by a recession that this year has ushered in. Times are beyond tough for many Americans, with millions of people across the country filing for unemployment.
Despite the economic turmoil we’re experiencing, it remains a seller’s market due to low housing inventory coupled with sustained buyer demand. The median list price for U.S. homes was $345,255 during the week of August 22, according to Zillow, which is 8.3 percent higher than the same week last year.
It’s also more difficult to get approved for a mortgage loan right now, because many lenders are increasing their lending requirements. For example, JPMorgan Chase now requires a credit score of at least 700 and a 20 percent down payment in order to get approved for a home loan.
And although virtual tours are convenient, it’s not ideal to buy a home without stepping foot on the property.
Should You Buy a Home Right Now?
Again, the answer of whether or not you should buy a home right now depends on your personal situation. Buying a home is a big decision, and no one knows what the next few months will look like.
If the following criteria apply to you, you might decide that now is a good time to buy a home:
- Your job is secure.
- You’re ready to settle down and live in the home for a while.
- You have good credit.
- You have enough savings for both a down payment and any homeownership expenses.
- You’re OK with virtual home tours.
- You have a decent appetite for risk.
If you’re confident that your job is secure and you have a good chunk of money saved up, it might be a good time to buy. It’s a long-term decision after all, and investing in a home for you or your family is something that depends less on short-term market shifts and more on the place you’re at in life. If you’ve reached a point where buying makes more sense than renting, if you’ve started a family, or you’re ready to settle down and start building equity, now might be the time.
Find Out What’s Needed to Buy a Home
If you’re still not sure whether you’re ready to buy a home, it can help to learn more about what goes into the process of purchasing. To learn more about what’s needed and the purchasing timeline, read our new guide, Home Buying 101: Your Roadmap to Homeownership.