Whether you’re hearing about low interest rates or longing for more space, you might be wondering if this is a good time to buy. Here’s what you need to know.
Are You Missing Out if You Don't Buy Now?
Not necessarily. There are many factors to consider beyond the current shifts in the market.
Zillow economists predict that home prices will most likely decrease between 2-3% through the end of the year from pre-COVID levels and slowly recover by late 2021.
The predictions include two other possible scenarios: Prices decline as much as 4% and take longer to recover, or as little as 1% and recover more quickly. For example, a home priced at $250,000 in February 2020 could be priced between $2,500 and $10,000 lower, at least through the end of the year, according to the forecast.
Which scenario plays out depends on many things, including how quickly the market reopens and whether interested buyers can still afford to purchase a home.
What the forecast doesn’t change is whether buying now or in the foreseeable future is right for you. The decision to buy depends on your personal circumstances. Trying to time the market for the best deal is something even professional investors aren’t very good at.
According to Zillow economists, the current environment poses both opportunities and challenges.
New opportunities for buyers might be out there
If demand stays strong and the crisis passes relatively quickly — both big “ifs” at this moment — then we can probably expect price growth to accelerate like it was earlier this year. If that’s the case, it might be a good time for some buyers in some markets to get ahead of any growth in home prices. Other factors that could help buyers:
Mortgage interest rates are very low, which has the potential to significantly boost your buying power.
There could be less competition for the still-limited pool of homes for sale, with many people putting plans on hold and staying home.
Sellers may be more flexible on pricing and/or timing in order to close a sale, especially if letting their home stay on the market will cost them or delay their own plans.
But the challenges could be daunting
Even with the best forecasting, we can’t know for sure how things will unfold over the coming months. If the crisis persists and social-distancing and other behaviors last through the bulk of the year, home prices may fall somewhat in response to the lack of demand from buyers. It could make sense for some buyers to wait to see if the home they’re eyeing today is available at a lower price tomorrow. Additional considerations:
Inventory is already low, and it’s unlikely that many would-be sellers will list their homes right now. That could make it harder for you to find the right home.
Mortgage interest rates are low but volatile — and lenders are working through a flood of refinance applications. For would-be buyers who secured financing in early March, this may not be as big an issue. It’ll be a lot tougher if you have not yet started the mortgage process.
Logistical hurdles need to be addressed. It may be difficult to complete the sale on time if some of the connected businesses, such as appraisals, inspections and title services, are temporarily closed due to public health orders.