“This year is going to be an exhilarating year for real estate!” according to many real estate professionals, investors, and other real property stakeholders but are potential home sellers and buyers universally aware of this? If you fall into one of these categories, you may be thinking this is impossible with everything going on during these challenging and unchartered times. Most likely, from everything you are seeing in the news – you are receiving a different message. The upcoming presidential election, possible recession, and political tensions are all factors leading to confusion and hesitancy. Here are some of the main questions of concern you may have and how to tackle them with the most recent insights.
1. Will the Presidential Election Impact Real Estate?
Election years can result in unstable and difficult times for the real estate market, even more so with the COVID-19 health pandemic still prevalent. Normally during this time leading into an election, both sides of the political spectrum would be addressing varying points of view about the economy with goals of addressing uncertainty among potential home buyers and sellers. Because of this, both buyers and sellers have typically taken a “wait and see” approach, waiting until the election is over before making any major real estate decisions. This is not something new and has been a trend for decades. Fortunately, this election year, the real estate market is taking a turn. With large buyer interest, low inventory, strong market strength and mortgage rates at historic lows – there is no better time than now to take advantage of opportunities within the real estate market.
2. Is a Recession Around the Corner?
The economic impact of COVID-19 is continuing to affect all of us. There are still millions of Americans unemployed, and millions of Americans who received a back to work offer at reduced hours – potentially creating economic distress for many families. In comparison to the Great Recession, fortunately our current economic conditions differ greatly. The previous recession created a large increase in negative equity due to an oversaturated housing market, risky mortgages, and the collapse of home prices – whereas our current economic situation is a product of vastly different events. Economists are now predicting that if a recession occurs, it may not be until 2021 or even 2022. On top of that, the real estate market is likely not a driving factor for an economic downturn, and the four recessions before 2008 saw little to no effect on the housing market.
3. Should I Worry About Depreciating Home Values?
No homebuyer wants to buy a home and have to worry about the value depreciating due to external factors out of their control. Even though it may be true there are some buyers holding off on their home search due to the current economic activity, it’s evident that there are still many traditional buyers and cash buyers that are actively pursuing real estate. This alone should be an indicator that future home values will be increasing. But there are heavy hitters in the real estate market like Freddie Mac, Fannie Mae, and the National Association of Realtors that have affirmed that this is a great time to buy and predict home values will continue to appreciate through 2021.
4. Should I Take Advantage of the Low Interest Rates Now?
If you are a potential homebuyer and you’re asking yourself this question, the next question you might be asking yourself is – why take the chance? Answer: Interest rates have been at historic lows since March – so why not take advantage of the opportunity?! According to Freddie Mac, this the first time in over 50 years our current mortgage rates have reached a low of 3.29%. If you are an interested buyer, this gives you great leverage and buying power. Even if mortgage rates slightly increase, as they are projected to increase to approximately 3.8%, you’d still be able to save a large amount of money on interest payments that could go towards your principal balance – ultimately saving you money on the lifetime of your loan.