Do You Have Questions About How the Novel Coronavirus is Affecting the Housing Industry? Get Answers Today
We are living through strange times and it seems that every part of the economy is taking a hit. You may wonder: How is COVID-19 affect the housing industry? Keep reading to get the facts from your local escrow company.
How Has Coronavirus Affected Mortgage Rates?
It has lowered them. The Feds have implemented two emergency rate cuts since the beginning of the outbreak and current yield on Treasury bonds is nearly 0%. As the stock market becomes more volatile, this can affect interest rates too. That said, some news organizations have noted that the relationship between interest rates and the stock market has not been consistent in this pandemic compared to how it has been in previous stock market drops.
Note as well that mortgage rates are indeed lower but many mortgage lenders are making it harder to get a mortgage. For example, Chase will not lend to borrowers with a credit score under 700 and all borrowers must have 20% to put down.
How Has the Pandemic Affected New Construction?
Homebuilder supplies are being impacted. About 33% of all home building materials come from China – and this does not include the finished products such as appliances, sinks, and bathtubs. As you likely expect, these supply lines have been interrupted. This could mean that new home construction will dip even in areas it has recently been hot.
That said, if the number of new homes available reduces the inventory of new homes, it could drive up the price of those. This is classic supply and demand – the key is how confident consumers will feel buying homes in the months to come.
What Do I Need to Do as We Move Toward the Homebuying Season?
Until this pandemic happened, every resource we had pointed to the likelihood of a very competitive housing market in the spring. We had low inventory, high demand, and low mortgage rates – the perfect storm. If you already own a home, now would be a good time to consider refinancing at the lowest interest rate you can find.
Other than that, studies of pervious pandemic effects on housing show that the price of homes doesn’t drop much – but the economic fallout could be significant enough that people are nervous about buying or selling. What does this mean for you? That all depends on your risk tolerance and your preferences.
