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COVID-19: SHOULD IT CHANGE YOUR PLANS TO SELL OR PURCHASE A HOME?

Thursday, March 19, 2020   /   by Sharyn Younger

COVID-19: SHOULD IT CHANGE YOUR PLANS TO SELL OR PURCHASE A HOME?

I've been fielding calls all week from friends, family and clients asking about the impact of COVID-19 on the Phoenix real estate market. It's difficult to imagine an industry NOT effected by COVID-19. Consider this a side effect of the steps necessary in the short term, in order to avoid protracted, more significant impacts in the long term. Of course the real estate market will be impacted. We've already seen a slight increase in cancelled contracts by buyers getting cold feet related to fears of economic downturn. We've also seen a minor increase in sellers taking their homes temporarily off the market - less in response to economic fears, and more related to wanting to limit opening their home to strangers....and germs. The likelihood of a 2020 recession has increased. At this time, however, we are not seeing a significant shift in the market. And we have many reasons to be optimistic:

  • Phoenix sees the second highest rate of in-migration in the nation as professionals follow job opportunities, and retirees seek the sun and a lower cost of living. That is not expected to change. 
  • The Phoenix real estate market has been strong and stable for the past many years, making it more likely to withstand a downturn with minimal impacts.
  • Recession doesn't typically equate to significant decreases in equity. 4 out of the past 5 recessions resulted in a less than 2% decrease in home values across the valley. And gains were quickly made (and then some) once the economy got going again. 
  • Buyer demand is expected to decrease easing issues related to low housing inventory and reducing the competition for buyers who continue to see the benefits of home ownership. 
  • Sellers remain in a good position to sell as demand is expected to hold its own due to low interest rates, and may be seeing the top of the market for awhile. 
  • And speaking of a competitive buyers market, buyers will no longer have to compete with several of the i-buyer platforms who snap up properties for investment/flipping potential. Companies like open door have put a moratorium on purchasing homes in the valley increasing opportunities for home buyers. 
  • Buyers who buy now may see a drop in value temporarily. However those seeking to buy and hold for 5 years or more, have the potential to see good appreciation over the long run, as is typical for real estate. 
  • Rents remain high in the valley, often matching mortgage payments. Buyers see the value of having a mortgage payment that will never go up in response to economic volatility vs. rent which has no fixed rate and can increase each year. 

If you are hoping to sell or purchase a home by summer, don't necessarily place your plans on hold. There are things you can do to pursue your goals while taking extra care to buy or sell safely: 

SELLERS: 

  • Discuss alternatives to holding an open house with your agent
  • Manage exposure by limiting showings and taking precautions when people do enter your home
  • Keep shoe covers, hand sanitizer and other barriers to germs handy throughout the home
  • Consult your agent regarding price adjustments related to current market conditions
  • Expect more days on market than previously as buyers sort through fears and concerns
BUYERS:

  • Talk to your lender about maintaining a financial comfort level while purchasing a home
  • Consult a financial planner with questions related to the wisdom of purchasing a home now
  • Have your lender lock your interest rate at the right time
  • Practice good hygiene while looking at homes
  • Get pre-qualified and be ready to go when the right home comes on the market

I would be remiss as a former psychotherapist if I didn't make one more important point: 
One of the most difficult things for humans to deal with is the unknown. We like to be able to anticipate consequences and require some level of certainty to feel in control. This situation is unprecedented for most of us. Anyone who tells you that they know what our communities will look like two weeks from now is not to be taken at face value. These are VERY uncertain times. If you've been feeling particularly fatigued, mentally foggy, unmotivated, anxious or irritable, you may be experiencing a malaise that comes from sustained uncertainty. Your best bet? Preparation - not just toilet paper stocking, but preparing for extended time at home with people you love, but never anticipated spending so much time with! Have a plan for keeping yourself healthy and for minimizing your contact with others who could be immunocompromised without you knowing it. Have things on hand that make you feel good - productive, in-control, enjoying being engrossed in something other than the news and every little cough or tickle. And stay focused on the CERTAINTY that this will pass. We will get through this as we have so many other crises. The more we care for each other and use common sense, the less impactful this time will be on real estate and every other aspect of our lives.
Copper Summit Real Estate | The Sharyn Younger Team
Sharyn Younger
480-589-2347
Waterstone Mortgage
Emilio Cosculluela
602-708-9322
Emilio.Cosculluela@WaterstoneMortgage.com

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