We have been talking a long time about how the pandemic has taken down the real-estate market, but have not yet answered this question. Is now a good time to buy a home? The answer, actually, is that it depends. If you are an investor, now is a great time to buy a home. It is a good time to buy investment property. If you are able to find a good price, that is. Finding a good price is always a challenge, and the home-buying process has been completely turned tables during the COVID-19 crisis.
Companies that work in this field— selling and buying homes— were put on pause. The unemployment rate of the year has increased drastically, and sellers have pulled listings of a majority of the houses that you could invest in. The actual numbers say that around 189,000 less homes were on the market in April 2020 than April 2019. Construction on new homes slowed as well in April because many builders were concerned about the state of the housing industry, with reasonable cause.
However, this does not mean it is a bad time to invest. A low price should not be expected because there are a lot less options to choose from. This crisis was predicted by economists that had been warning the U.S. prior to the pandemic. The home-building activity was far too slow over the years and the number of homes for sale had resulted in a huge shortage.
While now is a good time to invest, there are a lot of obstacles in the way that make it a bit difficult. There is a lack of foreclosures, and many investors are required to buy houses from online auctions. This adds competition for homes and could skyrocket prices with the amount of people auctioning.
To counter that difficulty, there is a category of property that could flood the market in the near future. Bookings for those who had ownership of vacation homes have been wiped and rented out to Airbnb, VRBO, and companies of the like. From this transfer, a lot of income was generated. Investing in this category of property, investors can expect “immediate liquidity”, says Glenn Kelman, the Chief Executive of Redfin.
A lot of mom-and-pop landlords have struggled because of missed rent payments due to unemployment, and vacation-home owners lose payments to the mortgage for the property. Providing with those struggling with this lack of income could give you a buying opportunity as an investor.
It is not a given how real estate prices will progress in the future, whether this storm brought upon the market will raise or lower prices is completely unknown. Investment is always the idea of buying low and selling high, but are prices low? Should you hold onto the properties bought for future sale? Or should you sell them right away? That becomes more of the question, and depends on you as an investor. There are a lot of unknowns, and if you choose to pick up the cards— because now is a good time for it— make sure to play them right.