The economy is grinding to a halt. Will that stop you from selling your Houston home fast? Here are the 5 ways the coronavirus will impact Houston
The coronavirus has hit the Houston market like a ton of bricks for a lot of homeowners, home seekers, renters, or anyone associated with real estate currently.
If you are already in the market for a house, we are sure all the uncertainty has you worried about the housing market. Will the coronavirus cause a housing collapse as it did during the financial crisis of 2008?.
Everyone is feeling the crunch not just your local investment companies like Sell Your Homes Houston. Major ibuyers companies like Open Door, Zillow, Offerpad, to name a few have suspended all operations due to the virus.
Stay at home orders and calls for social distancing have slowed the real estate market around the country, not just in Houston.
Although many people continue to purchase and view homes via media platforms like Zoom. Experts believe the economic uncertainty and personal financial concerns will affect the market beyond the threat of the virus.
As the weeks and months go by, you are likely to have more homeowners deciding to keep their home. Also, renters who were thinking of purchasing may consider renewing leases with current landlords.
Where does that leave the home sellers that wants to sell their home fast in Houston, rent or purchase new property?
Great question glad you asked, here are the 5 ways the coronavirus will impact Houston Real Estate in 2020.
Finding a Home
At the start of 2020, the real estate market was off to a great start picking up where it left off in 2019. Interest rates were low hovering below 4% and strengthened by a booming economic growth over the past several years.
Keep in mind, this was the beginning of 2020 before the coronavirus outbreak and the widespread shutting down of economies around the world including us in Houston.
Although home refinance activity has seen a major increase due to the low-interest rates. Home purchases have decreased due to economic uncertainty and other factors across the nation.
What are we seeing here in Houston? According to the Houston Association of Realtors (HAR), Houston’s housing market saw an impact in the last week of March. However, data will not show the full effect of the pandemic until the end of April.
The latest monthly market report by HAR has seen an 8.2 percent increase in a single-family home sale in March 2020 compared to March 2019. The average price of single-family homes increased by 3.8 percent.
Currently the number of days a home sits on the market before being sold is 65 days, unchanged from previous months.
What does this data mean? Homes are still on the market to be bought and sold. People continue to conduct business but in a safe manner following the guidelines of the CDC. Many real estate agents and property investors like Sell Your Homes Houston are also following these guidelines.
That means virtual showings and the use of remote document signature apps like DocuSign.
So, if you are a Houstonian looking to purchase that dream home, be safe, and take all safety precautions.
Interest rates are at all-time lows and there is plenty of inventory to choose from.
Qualifying for a Loan
Not only are homeowners in the weeds regarding what the near future holds. Mortgage lenders are also battling economic uncertainty by raising minimum credit scores, requiring a higher down payment, thoroughly checking employment statuses, and eliminating some loan types from their offerings.
According to Bankrate.com, Chase announced a minimum down payment of 20% up from 3.5% and a credit score of 700. Also, according to Chase.com, “Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new Home Equity Lines of Credit (HELOC). This will protect both you and the bank.”
HELOC is also short for home equity loans and home equity lines of credit.
Wells Fargo and US bank increased their minimum credit score to 680 including Veterans Affairs (VA) and Federal Housing Administration (FHA) Loans typically have lower scores around 580.
This will hinder many new homebuyers who are establishing their credit from getting a home loan and would-be buyers with less than stellar scores. 80% of FHA loans are used by fist-time homebuyers.
Navy Federal Credit Union and Bettter.com have temporarily stopped offering FHA loans and have followed suit with other major lenders by increasing the minimum credit score.
Not sure what your credit scores are? Head over to Credit Karma.com for your free score.
Selling Your Home
As homebuyer activity slows down in Houston and around the nation, many would-be sellers are deciding to delay putting their homes on the market.
Some home sellers are worried that if they put their homes on the market right now, they might now fetch the highest price.
Typically, a beautiful home on the market in a great neighborhood would gain a lot of interest, translating into a bidding war for the property, hence driving up the price.
With the current stay at home order and business closures, naturally you are going to have fewer homebuyers interested or being able to purchase.
Technology can bridge that gap to appoint by virtual showings and remote document signings.
However, purchasing a home is the most expensive purchase most people make in a lifetime. If you are trying to sell your home fast you must take that into consideration.
Virtual showings are great and absolutely needed right now more than ever. But most prospects that are spending hundreds of thousands of dollars, want to feel, touch and walk through the home before they buy.
After all, it must feel like home.
Another caveat to keep in mind when trying to sell your home fast are the contractors involved in the process. Many contractors of which are affected by the coronavirus along with other factors that tie into the home selling and buying process. Here are a few below:
· Real Estate Agent– markets and sells your home
· Home Appraiser– determines the value of your home
· Home Inspector– determines the condition of the home
· Title Company– reviews the title and provides title insurance
· Insurance Agent– provides home insurance
· A Mortgage Lender or Broker– underwrites and services the loan
· Handyman/General Contractor– updates and repairs your home
· Stager/Marketing Pro– provide services to help sell your home
Here at Sell Your Homes Houston, a great way to impact the community is focusing on helping homeowners going through foreclosure.
We help a lot of homeowners by purchasing their homes fast so they can save their credit and help them move on with their lives.
On March 18, 2020, the U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson, in consultation with the Trump Administration and the Coronavirus Task Force implemented a foreclosure and eviction moratorium for single-family homeowners with FHA-insured mortgages for the next 60-days.
How will that impact the Houston housing market?
As of May 18, 2020, the expiration of the 60-day moratorium you will have an influx of foreclosures hitting the market if the government does not step in.
Data research from the Harris County Clerk’s Office shows anywhere from 700-800 homes going to the foreclosure auction in May.
The auction is conducted on the first Tuesday of each month at Bayou City Event Center, between 10:00 am to 4:00 pm.
The good news is not all of these homes will go to auction. Many homeowners will explore several options to keep their homes.
That may include but not limited to, forbearance agreement, loan modification, refinance, or sell your home fast to your local investor.
The influx of foreclosure properties means a few things.
1. There is going to be a high number of homes on the market for sale.
2. Unfortunately, many people who lose their homes will become renters.
3. Opportunity to purchase homes at a steep discount, 10-20 percent.
4. Opportunity to purchase in a neighborhood that is otherwise out of reach.
5. A chance to capitalize on seller concessions.
Looking to purchase a brand-new home? Who does not like the feeling of something new? Everyone loves that new car smell.
Or maybe you are concerned with a previously inhabited home and not knowing if the former owners contracted the coronavirus. Your concerns are justified, you are not a germaphobe, this could be a life or death situation for some people.
The impact on homebuilders can and will be significant in the months to come.
Homebuilders are not only feeling the demand pullback from home seekers staying home in drones.
What about materials? China supplies more than 30% of the materials used in construction. Basic economics, the disclaimer “we do not have a degree in economics” but low supply could mean increase demand by homebuilders attempting to get a limited supply.
That intern could increase the cost of a new home. Maybe that new home smell is not that enticing after all.
Not to worry, homebuilders typically have a healthy profit margin. Also, there seems to always be an inventory sale or other incentives to purchase a new home.
In short, most homebuilders will do whatever it takes to earn your business, especially during economic uncertainty.
There are more than 5 ways the coronavirus will impact the Houston real estate market. However, we thought these 5 topics: finding a home, qualifying for a home, selling your home, impact on foreclosure and new homes, would be most helpful for Houstonians.
If you are in the Houston market for buying or selling your home, right now might be a good or bad time depending on your individual circumstance.
No matter if you are buying, selling, or renting please be careful and take care of yourself and our community.
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If you want to know more about how to stop or avoid foreclosure in the Houston market download our free guide today.