The coronavirus is causing more missed mortgage payments – survey

The coronavirus is causing more missed mortgage payments – survey 

Up to 6% of Canadian home owners said they missed a mortgage payment recently as a consequence of the COVID-19 pandemic, according to a mid-April poll by Forum Research.

The survey also found that 76% will fail to pay another loan instalment before the crisis ends. Meanwhile, 46% were unable to secure mortgage deferrals and other similar forms of aid from their lenders, CMT reported.

Renters were hit especially hard, with 14% saying that they missed a payment recently.

Mobility restrictions and work stoppages since late March have severely affected households and landlords alike. The global outbreak has upended the national economy as a result, said Todd Skinner, TransUnion’s regional president for Canada, Latin America, and Caribbean.

“Whether it’s their health, financial well-being or changes in day-to-day living, the lives of millions of people in Canada and abroad have been dramatically changed,” Skinner said.

Data from TransUnion indicated that 57% of Canadians saw their incomes fall over the past few weeks. Another 10% are bracing themselves for further declines in the near future, with the possible losses pegged at an average of $935.

The most acute effects were seen among millennials and Gen Z-ers, TransUnion said. Approximately 78% and 74%, respectively, of these cohorts expressed fears about not being able to fulfil their monthly bills.

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5 Principles for Investing in Uncertain Times

Close up photo beautiful amazed she her dark skin lady glad arms hands five fingers raised show countable uncountable things lesson wearing casual white t-shirt isolated yellow bright background.
For the last three years or so, many investors have been asking the question, “When is the next recession going to happen?”

My take on it was that it was going to be caused by something unknown or unpredictable.

More specifically, I was thinking a war somewhere could cause some global uncertainty and plunge us into recession. Recently, that tiff with Iran looked like it could do the trick. But it ended up being something even more unpredictable: a war on a virus that knows no borders.

While there were some other troubling aspects of the economy, such as student and consumer debt, the coronavirus is proving to be much more destructive so far. We went from an extremely low unemployment rate (under 4 percent) to a spike (and continued upward trajectory) in unemployment almost overnight.

If you are a landlord, you must be thinking of your tenants’ ability to pay rent right now. Just last week we were talking with our property manager and putting together a plan to raise rents to market rates. Now that has been put on hold. Many landlords are offering incentives, credits, or even waiving rent next month.

 

There are a lot of other questions out there, as well. While the real estate industry hasn’t been hit hard yet, we’re starting to see deals fall out of escrow, sellers wait even longer to put property on the market, and investors wondering if that deal they’ve got locked up would be better put on hold.

Some sellers may panic sell to liquidate assets, but I haven’t seen that quite yet. I’d love to hear in the comments what you’re seeing in your market though!

All this to say, these are uncertain times. So, how is a real estate investor to navigate the treacherous waters ahead? Here are several principles to help you shape your investing strategy in times of uncertainty.

Investing in Uncertain Times: 5 Things to Keep in Mind

wheel of ship against a dark cloudy sky while raining

Principle #1: Have Patience

Since we can’t predict the future, patience needs to be exercised. If things are worse than expected, then the market may not bottom out for some time. We’ll need to be patient as landlords, as well.

 

Principle #2: Look for Opportunity

Times like these are when wealth is created. Many people, myself included, wish they would have bought up properties between 2009 to 2014 (give or take). Here’s an oft-cited quote from Warren Buffett:

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Principle #3: Be Prepared

If you have income-producing properties, hopefully you have reserves set aside for circumstances like this. If not, then hopefully you have some equity to fall back on.

For those who wish to acquire properties—and have the means to save or raise money in the meantime—now is the time to prepare for those opportunities that will most likely be coming down the road. (Of course, the optimal time to prepare is always two years ago.)

Principle #4: Continue to Learn

You should constantly be learning. But in times like these, it’s important to learn from your mistakes or assumptions you’ve made in the past.

A woman holds a red umbrella on a fishing pier during a storm.

The last few years, I thought that affordable housing was bulletproof (or close to it). My rationale was that even if a recession were to hit, the more affordable a place is, the more likely there is to be sufficient demand to maintain solid occupancy rates.

Now I’m not so sure. Blue-collar and hourly workers are most likely to be affected by the latest circumstances, and they are the ones to most likely be renting “affordable” housing.

The average American is already in a tough spot when it comes to having an emergency fund. Those at lower income levels, even more so. If they are out of work for one, two, or more months, then the property owners who offer affordable housing may have a predicament on their hands.

Further, with schools now closed and children at home, the burden is on parents to care for their children first. Working from home and seeking out new employment will prove difficult.

Those with white-collar jobs or the ability to work remotely uninterrupted will be far less affected—unless the ripple effect in their particular industry hampers their ability to earn.

Principle #5: Be Optimistic

It’s important during tough times to maintain a sense of optimism.

I’ll be honest. This has been hard for me—I don’t like the disruption of routine and being told what I can or can’t do.

But we can’t dwell on the negative. This too shall pass (hopefully quickly). We’re in this together, so let’s put on a brave face, help each other out, and come out on the other side stronger, more resilient, and more grateful.

 

Source: BiggerPockets.com – Nate Shields

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Buyers Beware: 3 Things to Look Out for When Purchasing Property During a Recession

  

viewing in a magnifying glass the design of a house layout / inspection of construction objects
As we enter into a COVID-19-induced recession, many real estate investors say that this is the time to have cash ready to buy properties. Good investors understand that there are opportunities during times of panic, but wise investors know the obstacles to navigate when finding some of these properties.
This article will focus on a few aspects of investing to watch out for when buying a property in the midst of an economic downturn.

Deferred Maintenance

Let’s be honest, there is a pretty small chance that you are going to find a well-maintained property with great tenants during a recession, where the owners just couldn’t pay for it anymore. Most owners of investment real estate who take great care of their property and have reliable, well-behaved tenants in place are doing well across the board—they also understand the importance of asset reserves and protection in times like these.

caution spray painted in yellow on cement

Odds are if you find a great recession deal, you’re looking at a lemon when it comes to deferred maintenance. This isn’t necessarily bad, though. You can score some great deals on these types of properties and turn those lemons into lemonade! Just understand that you will likely have some big fixes to attend to, because the sellers probably used every last dollar they had to just keep the ship afloat in the first place.

Have an inspection done on the property and be prepared to front a little more for capital expenditures. When it comes to reserve dollars, it’s better to have them and not need them, than to need them and not have them.

 

Non-Performers

Another type of property to be aware of is the classic “non-performer.”

These properties often show characteristics of poor management. Non-performing properties may consistently have problems obtaining rent, whether it’s from irresponsible tenants or pushover management. We have commonly seen this in properties that are fully paid off and have no debt service (often self-managed).

You can spot a non-performer by identifying lazy bookkeeping and shoddy maintenance practices. These properties are frequently sold by sellers who need help making ends meet. And if they’re in a pinch, you might be able to get a good deal.

There are a host of reasons why targeting these properties is a good idea in recessionary times, but just understand that you’ll have an uphill battle when you buy one. You need to have a plan in place to recover the asset.

Evictions

Recessions can really hit hard for people who live paycheck to paycheck. This can turn into a problem for investors who are purchasing property during a recession.

Nobody really wants to evict tenants because of economic instability and job loss—but sometimes it happens. And in some places right now, you wouldn’t be able to evict a nonpaying tenant even if you wanted.

tenant-red-flag

Now, that’s not to say that all properties are going to have tenants that are unable to pay during a recession, but there might be a few non-paying tenants that go “unreported” on sellers’ books to make the property appear more attractive.

 

You need to do your due diligence and dig deep to make sure that the sellers are not offloading a property to sidestep a hefty round of upcoming evictions that will fall into YOUR lap after closing. You can negotiate these things into a contract and help avoid some serious headache and financial strain post-closing.

Review the seller’s numbers and see if they match what the leases say. If they don’t, maybe ask to see proof that the payments were submitted, such as bank deposit statements. You need to feel confident that you are getting a property that has paying tenants.

It’s a tough pill to swallow if you purchase a property and then don’t have any rent coming in to pay the mortgage—on top of already mounting eviction fees—when you were planning to use the rent to cover expenses. So be sure to do your homework!

These are just a few things to look out for when buying properties in a recession.

I personally think an economic downturn is a great time to purchase assets at a discount. By applying a little wisdom, you can begin paving your path to financial freedom.

Recession-Proof Real Estate book blog ad

Source: BiggerPockets.com – Ryan Sajdera

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Is the U.S. Hurtling Toward Another Housing Crash?

All of us have a mind-boggling range of challenges to deal with in these stressful and uncharted times of COVID-19. But for many home owners, sellers, and buyers, one concern rises to the top: Are we heading straight into another housing crash?

Little is assured these days, and our current situation is without precedent. But most housing experts believe the wave of across-the-board home-price slashing and desperate sell-offs that characterized the aftermath of the Great Recession are far less likely to materialize this time around.

Why will things be different? Because bad mortgages, rampant home flipping and speculation, and overbuilding all contributed to the last financial meltdown. This time around, the much-stronger housing market isn’t the driver of the crisis—it’s one of COVID-19’s many victims.

That could provide something of a cushion for real estate to prevent another repeat of the late aughts.

“There’s no way we get through this unscathed. But I don’t think the world will fall apart in the housing market the way it did in the last recession,” says realtor.com®’s chief economist, Danielle Hale. “We won’t see prices driven down out of necessity because people were forced to sell like before.”

In fact, the fundamentals of the housing market couldn’t be more different from the economic meltdown of 2007–09. In the lead-up to the Great Recession, it seemed like just about anyone could get a mortgage—or two or three. Today, only buyers deemed less of a risk can score a loan. Credit scores need to be higher, debt-to-income ratios need to be lower, and lenders verify incomes much more carefully.

Additionally, in the mid- to late-aughts, there was a vast oversupply of homes. So when the market crashed, there simply weren’t enough qualified buyers to purchase them. And with all of the foreclosures going up for sale, a result of bad loans, home prices plummeted.

But today, there’s a severe housing shortage that’s keeping prices high.

The biggest wildcards in this current mess are just how long it takes to get the virus under control—and then how quickly the economy takes to bounce back. About 22 million people, or 13% of the U.S. workforce, filed for unemployment in a month’s time. Experts predict unemployment could rise to 15% or even 20% before the pain subsides.

Those financial struggles have made it increasingly difficult for folks to pay their rents and mortgages—let alone purchase starter homes or trade-up residences. Roughly 6% of mortgages were in forbearance as of April 12, according to the most recent data released from the Mortgage Bankers Association.

This has sparked fears of another foreclosure crisis—one of the hallmarks of the Great Recession and its aftermath.

“We’re [not going to] get through this recession without any challenges for the housing market,” says Hale.

Will there be another housing fire sale? Probably not

Deep price cuts are the dream of many cash-strapped buyers—and dread of home sellers. They may not happen this time around, but a slowdown in the price hikes of the past decade are likely, most housing experts say. Home prices may dip—but just slightly, says Hale. (The median home price was $320,000 in March, according to the most recent realtor.com data.)

Prices are driven by the rules of supply and demand. On the supply side there is a record-low inventory of homes on the market, as sellers have been steadily yanking them off. Many don’t want potentially infected strangers walking through their homes and want to wait for the economy to improve so they can fetch top dollar for their properties. Others don’t want their homes to linger on the market unsold during a time when fewer transactions are taking place.

Still, demand for new homes hasn’t evaporated. There are simply too many would-be buyers out there: millennials eager to put down roots and start families, folks who lost their homes during the last recession and want to buy another property, and boomers looking to downsize.

“People need a place to live, and at some point we’re going to get past the virus,” says Robert Dietz, chief economist of the National Association of Home Builders.

And while many potential buyers will grapple with job losses or the prospect of them, others will be lured in by the prospect of superlow mortgage interest rates. Rates were just 3.31% for 30-year fixed-rate loans as of the week ending April 16, according to Freddie Mac.

“I don’t think we’ll see significant price cuts,” says Dietz. “There’s a lot of young people who want to attain homeownership.”

There will likely be a “sharp decline” in home sales until the threat of the virus and its economic toll have waned, says Lawrence Yun, chief economist of the National Association of Realtors®. But he anticipates sales will pick right back up as soon as things return to some semblance of normalcy. That will also keep prices high.

The luxury market could take the biggest blows, however.

Even in the best of times, these ultraexpensive homes can be harder to unload. But it will likely be harder to find buyers willing to pay top dollar with the economy and stock market in shambles. Wealthier buyers often have more invested in financial markets, which are being buffeted by wild fluctuations.

“The higher-priced homes are the ones that are being withdrawn [from the market] more often,” says Frank Nothaft, chief economist of the real estate data firm CoreLogic. “The lower-priced homes continue to be in really strong demand.”

But not everyone has such confidence that home prices will remain strong.

Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton, FL, expects that prices will fall much more along the lines of what many bargain-hunting buyers have been hoping to see.

If the economy reopens quickly, prices may decrease only by 5% to 10% nationally, says Johnson. They could be more or less depending on the individual market. But if the crisis and stay-at-home orders go on for another 60 to 90 days, he anticipates prices will plummet up to 50% as there won’t be many folks shopping for homes.

“I expect sales to dry up. I expect listings to dry up. I expect showings to dry up,” says Johnson. “I hope for the best and fear the worst.”

We’ve underbuilt rather than overbuilt in the run-up to this crisis

The glut of new construction was a calling card of the Great Recession. Newly built homes and communities sat vacant, or mostly empty, after the crash. Cities and suburbs were pocked with stalled construction sites. There were too many homes for too few buyers.

But things are quite different now.  Last year, builders put up just under 900,000 single-family homes, shy of the nearly 1.1 million homes considered necessary to alleviate the housing shortage and accommodate the growing population.

“We entered this [new] recession underbuilt rather than overbuilt,” says NAHB’s Dietz.

But a reduced demand from buyers will likely translate to fewer homes being erected in the near future. And the financial crisis is already making it more difficult for builders to secure the financing needed to put up new homes and developments.

Housing starts, construction that’s begun but not completed, were down 22.3% from February to March, according to the seasonally adjusted numbers in the most recent U.S. Census Bureau and the U.S. Department of Housing and Urban Development report. Traditionally, this is a time when construction generally picks up alongside the warmer weather heading into the busy spring and summer season.

“Building has been far below average for 10 consecutive years, which is the reason why we’ve faced housing shortages,” says NAR’s Yun. “Today during the pandemic, there are even fewer listings.”

Bad mortgages are largely a thing of the past

One of the biggest culprits of the last economic downturn were riskier subprime mortgages and “liar loans.” Since the housing bubble popped, these loans have largely ceased to exist.

Subprime loans were doled out to less qualified and often uninformed buyers, typically lower-income minorities with lower credit scores. After a set period of time, the interest rates on these loans ballooned higher—well out of reach of the borrowers. They defaulted on their mortgages, which set off the housing bust resulting in scores of foreclosures and short sales.

Liar loans were those given to folks whose lenders didn’t verify their income. That slipshod practice has largely vanished.

“The mortgages made today have much lower risk. Lenders have tightened up their standards for making loans,” says CoreLogic’s Nothaft. “They verify income, they verify employment. Subprime lending and liar loans are gone from the market.”

Of course, it’s still likely to be difficult for even the most qualified homeowners to make their mortgage payments if they’ve lost their jobs or a portion of income to the coronavirus. So the federal government is stepping in.

Mortgage forbearance, as well as loan modifications in many cases, are being offered on government-backed mortgages for up to 12 months for those affected by the coronavirus. Many lenders are offering similar assistance to those who don’t have a Fannie Mae or Freddie Mac loan.

“The mortgage forbearance is going to prevent foreclosures,” says Yun.

But that doesn’t mean there won’t be some down the line.

“We will probably see some delinquencies rise,” says realtor.com’s Hale. “And once the moratoriums are lifted, some people are going to struggle to pay their mortgages.”

In addition, investors aren’t running rampant like they were in the aughts. Instead of buying properties to hold them and jack up the prices, they’ve been investing in and upgrading the properties they’re buying. And they’ve had a tougher time of it as the number of foreclosures, short sales, and other cheap and auctioned-off homes have become harder to find as the economy had rebounded.

What does the future of the housing market look like?

How the housing market will fare over the coming months and years is still a mystery, since no one knows just how long this public health pandemic will last and how long the economy will take to rebound. Real estate is likely to suffer until the economy improves and folks feel more confident in buying and selling homes again.

The stimulus bill and extra $600 a week in additional unemployment funding are likely to buoy the economy and “relieve some of the anxiety,” says Yun.

Even in a worst-case scenario, the majority of Americans are still employed. And mortgage interest rates are at record lows. They’re hovering around 3%, unlike the more than 6% they were at at the beginning of the Great Recession.

“This [crisis] is short-term,” says Yun. “We will come out of this.”

Even those with less rosy views believe that a strong rebound for housing may be in the cards.

“If we go for an extended period where we’re under stay-at-home orders, then we can expect a crash on par with the previous one,” says real estate economist Johnson. “But the comeback could be quicker.”

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How to Create a Backyard Oasis (Without Breaking Your Budget)

Picture your ideal vacation: a getaway from anything and everything that’s stressing you out, a place where you can feel restored, rejuvenated—and, let’s be real, enjoy a drink with a tiny umbrella in it while working on your tan. Aaah. That happy place doesn’t have to only exist in your dreams or require you to save up for a decade to visit it. What if you could go there any time you liked? It’s possible. Truly. Here’s how to create a backyard oasis that may rival any resort vacay.

 

woman gardening in backyard
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1. PREP YOUR YARD

The average backyard renovation costs $7,500 to $10,000, according to HomeAdvisor data, and one major way to trim your expenses is to get your hands dirty. That means raking up leaves and clearing your existing planting beds of dead foliage and weeds, so you have a blank canvas to assess what you’re working with—and where your biggest opportunities lie.

 

SPONSOREDwoman picking vegetables in garden
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2. BEAUTIFY YOUR VEGETABLE GARDEN

Searches for victory gardens have skyrocketed in the past 90 days, according to Google Trends, but that doesn’t mean your new (or existing!) vegetable garden has to be an eyesore. With the help of Miracle-Gro® Performance Organics® consider using raised bed planters, container gardening or intermixing veggies and herbs right into your flower beds so that you maintain a sense of landscaping. It’s all about form and function here, folks.

man relaxing in hammock
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3. CREATE A DESIGNATED LOUNGE AREA

Fact: To create a true getaway, you need a spot where you can kick back and put your feet up. Here are a few ideas to consider:

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4. TAKE DINNER AL FRESCO

Whether it’s a long, rectangular table the whole family can gather round or a fold-up bistro table and chairs that can squeeze into the tiniest of spaces, a spot for enjoying dinner—or an early morning cup of coffee—is crucial. Two things that can take that experience to the next level? Upgrade the chairs with extra-cushy cushions (because the standard-issue ones are often pancake-like) and a tabletop pizza oven, which cost a fraction of the price of freestanding brick ones.

backyard waterfall
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5. JUST ADD WATER(FALL)

Just like you design a room, your yard should have a focal point and nothing draws your eye quite like a small waterfall or fountain. (Plus, how soothing are the sounds of a babbling brook?) It doesn’t have to be a huge undertaking, either—dozens of styles, from faux-rock formations designed to complement your surroundings to sleek, ultra-modern models, are available online and require minimal setup.

butterfly garden
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6. BRING ALL THE BUTTERFLIES TO YOUR YARD

Sweet alyssum, salvia and torenia are just three of the many flowering plants that will add color to your yard—and attract all kinds of hummingbirds, butterflies and bees. To help decide which plants are right for your landscape, check out the USDA’s hardiness zone map, which reveals what types of greenery can survive in your area, based on how cold it gets.

man and woman backyard fire
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7. LIGHT THINGS UP

Just because the sun’s gone down doesn’t mean the party has to end. Low landscape lights along pathways, a trio of LED-filled lanterns near the patio furniture and a simple set of string lights overhead can create a romantic ambience that won’t leave your guests busting out their phone’s flashlights to move around. With these areas covered, you may very well become a staycation person. Just don’t be surprised if your neighbors keep finding excuses to drop by, too.

Source: Purewow.com Apr. 24, 2020

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Should I Buy a House During the Coronavirus Crisis? An Essential Guide

Spring is upon us, which typically involves a big peak of home buyers checking out properties, negotiating, and closing on new places. But the coronavirus outbreak—with its quarantine measures and economic uncertainties—has many a real estate shopper wondering: Should I buy a home now, or wait?

We’re here to help you navigate this confusing new normal with this series, “Home Buying in the Age of Coronavirus.”

This first installment aims to help you figure out whether you can—and should—shop for a home right now, or hold off until this crisis blows over. Read on for some honest answers that will help you decide what to do.

The impact of the coronavirus on the housing market

So what state is the housing market in right now, anyway? While that depends on how bad an outbreak an area is suffering, most markets are feeling some sort of hit.

“The coronavirus is leading to fewer home buyers searching in the marketplace, as well as some listings being delayed,” says Lawrence Yun, chief economist for the National Association of Realtors®.

The latest NAR Flash Survey: Economic Pulse, conducted on March 16 and 17, found that 48% of real estate agents have noticed a decrease in buyer interest attributable to the coronavirus outbreak.

However, nearly an equal number of members (45%) said that they believe lower-than-average mortgage rates are tempting buyers to shop around anyway, without any significant overall change in buyer behavior.

For those who are determined to buy a home, there is opportunity out there.

“This is the best buyer’s market I have ever seen in my career,” says Ryan Serhant of Nest Seekers and Bravo’s “Million Dollar Listing New York.”

“Sellers are nervous, there’s excess supply, and interest rates have been hovering at historic lows. You can own a home for less per month than you can rent an equivalent property in most areas,” he adds.

With fewer home buyers out there looking, you have less competition in your way.

“Unmotivated and uncommitted buyers have dropped off,” adds Maggie Wells, a real estate professional in Lexington, KY. “Less competition is a huge leg up in this market.”

The window of opportunity for buyers won’t stay open wide forever. NAR data shows that there was a housing shortage prior to the outbreak.

“The temporary softening of the real estate market will likely be followed by a strong rebound, once the quarantine is lifted,” says Yun.

This pent-up demand could eventually push home prices higher. That could mean that the time to strike for bargains is now.

Bottom line: If social distancing has made you realize you don’t love the place where you’re currently spending most of your time, it’s a good time to consider buying.

How the housing industry has adapted to keep buyers safe

Although it’s a scary time to be out and about checking out real estate, it is still possible to do so and stay relatively safe. The industry has rapidly adapted, introducing approaches that minimize exposure to the virus.

For instance, many agents are now working remotely and conducting most of their business virtually.

“Buyer and seller consultations have transitioned to virtual meetings with success,” says Kate Ziegler, a real estate agent with Arborview Realty in Boston.

While open houses or showings may not be easy to arrange because of quarantine or other safety issues, real estate listings have stepped up to the plate by offering virtual tours.

“We can send clients videos of whatever properties they want to see, or we are happy to have our agents FaceTime from a property,” says Leslie Turner of Maison Real Estate in Charleston, SC.

While those who are immunocompromised may want to stay home, if you’re otherwise healthy, it is also still possible to see some homes in person in some parts of the country. You’ll want to take some precautions before you go.

“Hand sanitizer at the door has become the norm, as well as shoe covers, even on sunny days,” says Ziegler.

During the tour, it’s also now customary for the listing agent to open all doors, so that home buyers can explore closets and other enclosed spaces without touching anything as they look.

If you do make an offer that’s accepted and you head to the closing table, real estate agents and attorneys are also adapting to remote closings, to keep you out of a crowded conference room. (We’ll provide more information about virtual tours and remote closings in later installments.)

How to weigh economic concerns

Coronavirus aside, anyone thinking about buying a home is also likely to be weighing whether it’s a smart idea when the economy is in a downward spiral. But in the same way you can’t easily time a stock purchase to make a profit, you can’t easily time a home purchase, either.

“Recession or not, it’s impossible to time the market, whether for buying stock or buying real estate,” says Roger Ma, a New York–based financial planner and owner of lifelaidout.

Just keep in mind that while current market conditions offer an incredible opportunity for home buyers to lock in historically low interest rates for a mortgage, rates are actually going up quickly, because so many people are refinancing.

If you wait too long to buy, you may miss the money-saving boat. So make sure to read up on the latest mortgage rates first.

Besides mortgage rates, home buyers are probably wondering about the stability of their income, as fear of layoffs loom.

“We are entering uncharted territory,” says Michael Zschunke, a real estate agent in Scottsdale, AZ.

On the flip side, putting a property under contract now and locking in a low interest rate gives a buyer some control at a time of relative uncertainty, adds Turner.

The takeaway from all this? It matters more than ever to get pre-approved for a mortgage, to calculate your home-buying budget accurately.

If you’re worried about layoffs, you should buy a home well under budget so you have enough money left over for closing costs, home maintenance, and a rainy day fund. Now is the time to crunch your numbers more carefully than ever before. Below is what you need to consider.

  • Research ways to reduce your closing costs. For instance, many loans allow sellers to contribute up to 6% of the sale price to the buyer as a closing-cost credit.
  • Figure out how much you need to set aside for yearly home maintenance and repairs. A smart budget is to have between 1% and 4% of the purchase price of your home.
  • Be sure to put aside an emergency nest egg for unexpected repairs. On average, it’s a good idea to sock away 1% to 3% of a home’s value in cash reserves.

In our next installment, we’ll explore all the ways to conduct a house hunt safely. Stay tuned! In the meantime, here’s more on buying a home during a recession.

Source: Realtor.com –  | Apr 6, 2020
Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in the New York Times Magazine, Vanity Fair, and Boston Magazine.
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The real estate game in Canada has new rules

COVID-19 has changed the way Canadians shop for homes and that may not change, says Phil Soper, president and CEO of Royal LePage.

“The impact of COVID-19 on the Canadian economy has been swift and violent, with layoffs driving high levels of unemployment across the country. While is it sad that these people skewed strongly to young and to part-time workers, for the housing industry, the impact of these presumably temporary job losses will be limited as these groups are much less likely to buy and sell real estate,” says Soper. “From our experience with past recessions and real estate downturns, we are not expecting significant year-over-year price changes in 2020. Home price declines occur when the market experiences sustained low sales volume while inventory builds. Currently, the inventory of homes for sale in this country is very low, matching low sales volumes as people respect government mandates to stay at home.

“It is easy to mistakenly equate a handful of transactions at lower prices to a reset in the value of the nation’s housing stock. Distressed sales that occur during an economic crisis are a poor proxy for real estate values.”

The Royal LePage House Price Survey and Market Survey Forecast released this week says the aggregate price of a home in Canada is expected to remain remarkably stable through the COVID-19 pandemic.

“If the strict, stay-at-home restrictions characterizing the fight against COVID-19 are eased during the second quarter, prices are expected to end 2020 relatively flat, with the aggregate value of a Canadian home up a modest one percent year over year, to $653,800,” says Soper. “If the current tight restrictions on personal movement are sustained through the summer, the negative economic impact is expected to drive home prices down by three percent to $627,900.

“In December 2019, Royal LePage forecast the national aggregate price to increase 3.2 percent by the end of 2020. Due to COVID-19, expected price growth has been revised down almost 70 percent compared to Royal LePage’s base scenario.”

The market will return looking different, says Soper.

“As we ease out of strict stay-at-home regimens, sales volumes will return; traditional home sales practices will not,” he says. “The popular open house gathering of buyers on a spring afternoon is gone, and it won’t be coming back any time soon. The industry is leveraging technologies that allow a home to be shown remotely and social distancing protocols, where we restrict client interaction with our realtors to limited one-on-one or two meetings, will continue for months and months. This process is inherently safer than a trip to the grocery store.”

Soper presents two scenarios

• “If the fight against the coronavirus requires today’s tight stay-at-home mandates to remain in place for several months more, with no semblance of normal business activity allowed, temporary job losses will become permanent and consumer confidence will be harder to repair,” he says. “This would place downward pressure on both home sales volumes and prices.”

• “Equally, if the collective efforts of Canadians slow the spread of the disease to manageable levels, and if promising science and therapeutic drugs are announced, people will return to their jobs, market confidence will bounce back quickly, and we could see Canada’s real markets roar back to life, with 2020 transactions delayed but not eliminated.”

Source: thesudburystar April 18, 2020 12:12 PM
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