Real estate investors have been eagerly eyeing the news for any sign of an uptick in recent months regarding whether the market will settle and resume its regular price action. Unfortunately, the information for the sector doesn't seem good. Market Watch notes that the pressures are mounting on the industry, as market forces threaten to collapse the housing and mortgage bubble yet again. Amidst this, many investors are using LLCs for real estate holding, in the hopes that they can weather this uncertain period. Whether they will succeed is a question of how long uncertainty will remain within the market.
Bouncing Back from a Terrible period
The first few months of COVID were among the worst the industry had seen in years. Brookings notes that in March, the sales of homes in Washington DC showed a distinct drop based on comparisons to previous years for the same month. With buyers not having much faith in remaining solvent enough to pay mortgages, it was clear that buying a house at that point in time wasn't a good choice. As a result, many homes went unsold, remaining on the market for months after agents would have closed their sales, were it not for the pandemic. The depressed market had the knock-on effect of forcing house prices down.
Massive Unemployment Fuels Uncertainty
The buying public tends to invest in housing when they can securely pay that house off. Mortgage payments typically replace rent, and buyers who have concrete, stable jobs make the best investments for banks. However, with the recent surge in unemployment in several sectors of the industry, workers no longer have that security. Employees at jobs that require face-to-face interaction no longer have a workplace to go to. Even those who have already secured mortgages may be calculating how long they have to wait before they should their house up for sale, returning it to the market because they can't make payments. The unemployment spurs the market's uncertainty, and as long as it continues, the market will remain shaky.
Some Light at the End of the Tunnel
While the pandemic is still ravaging the world, a few local housing markets have been making a significant comeback, spurring hopes of the same across other regions in the US. Realtor notes that half of all metropolitan areas had recovered from their low points during the pandemic. Despite the uptick in these regions, the rest of the country may still need to look at recovery from a practical perspective. The demand for homes is rising again, and we may see a new demographic of homeowners come out of this crisis.
A Good Time to Buy?
Aside from new real estate developments on the rise, new homeowners are also going up. Research has found that there has been a rise in the amount of new homeowners entering the market. It seems that Americans are making up for lost time. Experts estimate the change in the mindset of homeowners is due to the stimulus package, and a rush for low-density housing to escape the crowded spaces of the big city. Several professional realtors are estimating that this new influx of buyers is a delayed spring buying season now coming to fruition.
As a buyer, one of the areas you'd look at would look at to convince you whether buying a new home is a good idea is the mortgage and interest rates you'll be getting. At present, interest rates are as low as they could be. Experts consider this to continue for a while, spurring more people to look at now home ownership. Unfortunately, the price of real estate seems to be going up, and the supply shortens. With so many people looking for new homes, there's a surprising shortage of sellers, making it difficult to meet demand.
High Prices May Remain For a While
Bidding wars have already begun on in-demand properties in suburban areas. With demand this high and shortage of open properties in desirable areas, it's unlikely that you'd be able to land a great house on a budget. There are budget options in less desirable areas, however. Large cities are seeing a lot of their residents putting up apartments for sale as they move to less dense areas. Low-density housing has seen a rise in popularity, but city apartments have seen a sharp decline. People realize that living in such close quarters makes them vulnerable to any COVID-like pandemic in the future.
Housing developers are also looking at the possibility of creating low-density housing estates to deal with the new demand. Even so, it may be some time before they can solidify their business partners and start construction. It's uncertain as to whether this market situation will continue indefinitely or if something will give before that time. Additionally, no one is certain what the progress on a vaccine for the virus is and whether that will encourage more people to move back into the city.
Buy Now or Buy Later?
Real estate investors may want to hold out until prices come back down for suburban residential districts, but they may have a long wait in store for them. Urban apartments that have gone up for sale may prove to be a decent investment, provided that you can find a buyer within the next few years. Homeowners, on the other hand, would be best advised to buy now. Even if the price seems huge, waiting longer for a better price is ganbling on things changing. With more individuals working from home, the need for a space larger than an apartment is something they should address immediately. A new house deals with that consideration and offers collateral for any loan they may want to take later in life.
Will it Last?
As with all predictive metrics, it's not clear whether this recovery will continue indefinitely. Uncertainty still hangs heavy like a shroud over the economy. At the current time, banks are offering mortgages at incredible rates to stimulate more house purchases. As great as the rates are, if the economy continues to slump, those new homeowners may soon find themselves living outside of their means.
