The world is dealing with an unprecedented situation right now; something people haven’t had to face in almost a century – a global pandemic. Coronavirus. COVID-19. Whatever you want to call it, it has impacted and effected every American, whether you like to admit it or not. People have lost their jobs, their health, and we are all beginning to lose our sanity. What was previously a robust economy is now teetering on the brink of who knows what. While there’s a lot of uncertainty and unanswered questions as to what the next few months are going to bring, here are a few things we do know:
Real Estate is considered an essential business: Banks, currency exchanges, lenders, appraisers, title companies, legal services, accounting services, insurance services, and real estate services (including appraisal and title services) are considered essential businesses. This means if you have a real estate transaction that is pending or in the works, it can be seen through closing. That is why title companies, appraisers etc., are included in the order. Moving companies, stagers, photographers, and videographers are also cleared to work.
The Real Estate market is still very active: It may be hard to believe, but 116 new listings just went on the market on the Near North Side alone. There are 55 new listing that just hit the market in Lincoln Park, 33 in the Loop, 80 in Lakeview, 18 in Park Ridge, and on and on and on. These are not ‘active’ listings. These are brand new. Houses are still going under contract, and closings are still taking place every day. Of course, how we accomplish these things are very different. The industry implemented tools like drive-by appraisals, car park closings, and virtual open houses, so the real estate world can continue to turn. More impressive than the quick implementation of these new tools is the reasoning behind it. Buyers still want to buy! And sellers still want to get their homes sold. People who were ready to get in the market a few weeks ago are still just as ready – they’re just waiting for the green light. And while we’re all socially isolating, working from home, and self-quarantining, there is plenty of time to surf the internet and find your new dream home (thanks, technology)!
Speaking from personal experience, we have seen only a slight decrease in business, and the reason for that is purely logistical. In order to flatten the curve and put an end to Corona-gate, we have to self-isolate. This means no showings, no open houses, and no meeting at Starbucks to discuss what you thought about the mid-century modern we saw on last week’s whirlwind buyers tour. But we can do things slowly, and safely; with Lysol, hand sanitizer, face masks, booties, staying 6’ apart… It’s at your discretion. We, as your real estate agent, are here for you. If you can not wait another minute to buy (and in some cases you really can’t wait to buy – hello lease expirations, homesale contingencies, and work relocations) we will do everything in our power to find you the perfect home today. It can be done, and agents are working as diligently and as safely as possible to keep the market in motion. If you’re ready to go, we’re right there with you.
What about housing prices? We can say confidently that most of the houses that just went on the market are priced fairly. We are not looking at a 2008 era over inflation, but people are not giving things away for free either. Honestly, the general philosophy at the moment seems to be to price aggressively – NOT undervalue or skew the curve, but to make the buyer an offer they can’t refuse. And the truth is, nobody knows what the next few weeks or months may bring. But we as real estate agents have a responsibility to act prudently so we don’t accidentally shift the housing market one way or the other. Before listing a home, we always do our due diligence, look at the comparables, and have an honest discussion with the sellers to see what their financial position is, and figure out the bottom line. We will do the same for you – today, tomorrow, six months, or a year from now.
Is now a good time to apply for a mortgage? This one is a little bit tricky. Interest rates are at an all-time low, but interest rates are not the same as mortgage rates. They are, however, closely related. “The Fed doesn’t actually set mortgage rates. Instead, it determines the federal funds rate, which generally impacts short-term and variable (adjustable) interest rates. This is the rate at which banks and other financial institutions lend money to one another overnight to meet mandated reserve levels. When the federal funds rate increases, it becomes more expensive for banks to borrow from other banks. Those higher costs may be passed on to consumers in the form of higher interest rates on lines of credit, auto loans and to some extent mortgages.” (https://www.discover.com/online-banking/banking-topics/how-the-federal-reserve-affects-mortgage-rates/).
Mortgage rates right now are hovering around 3.9% which is a fairly decent rate, but they will probably continue to fluctuate for the next several weeks as the Fed works to introduce a stimulus plan that can inject some capital back into the market. BUT if you were pre-approved for a mortgage two months ago, your rate probably hasn’t changed very much. So, is now a good time to apply for a mortgage? Well, assuming you can afford a mortgage and the other costs involved, and your job is not in danger of being cut, then yes! But unless you’re sitting on pretty hefty savings and know your industry won’t be impacted by what’s going on, then you should err on the side of caution. In short, economically it’s a fine time to apply for a home loan – if and only if – you are fortunate enough to be employed in an industry that hasn’t been devastated by the coronavirus, you have the necessary resources, and decide you want to strike while the iron is hot.
The bottom line is this: we as a global community are dealing with something totally unprecedented. Nobody knows what is going to happen, or how long it will take for things to return to normal. But it will happen eventually! And when it does, we at The Hajdu Group will be ready and willing to help you in any way that we can. We are better together, and we will be waiting for you on the other side.