The coronavirus pandemic has already begun to affect the economy,and it won’t be clear for a while how much of an impact it will have. The stock market has been rising and falling dramatically and investors have seen their portfolios rapidly lose value. Many people have lost their jobs or face the prospect of losing them.
The Federal Reserve has slashed interest rates to help stabilize the financial markets, but numerous analysts have warned of a global recession. That has many people wondering whether they should buy a house or wait.
Reasons to Buy Now
Low interest rates mean you could buy a house and have lower mortgage payments than you otherwise would, or you could purchase a more expensive home than you would otherwise be able to afford. Sellers who are facing financial problems might be eager to sell their homes and might be willing to accept less money than they would have in a more stable time. If you’re a first-time homebuyer, things might be simpler for you since you wouldn’t also have to worry about selling a house and possibly losing money.
Reasons to Wait
Many sellers are anxious about the economic situation and concerned about prospective buyers coming to their home and possibly spreading coronavirus. Some have therefore taken their homes off the market so they can wait for things to settle down before deciding how to proceed. If you bought a house now, your dream home might be re-listed in a few months and you could miss out.
Even though interest rates are low now, the economy is in turmoil, which means lenders could be more cautious than usual. They might have stricter standards to make sure they don’t issue mortgages to borrowers who might not be able to repay them. That means that it could be harder to qualify for a mortgage now than it was just recently.
You could face additional inconveniences. For example, you might only be able to take a virtual tour of a house you’re interested in buying, experience delays in scheduling the inspection and appraisal, be unable to sign documents in person and have trouble booking a moving company.
Should You Buy a House or Wait it Out?
Right now, the economy is unstable and the future is uncertain. Think carefully about your personal situation and how comfortable you are with risk. Buying a house now might be a good idea, provided your job is secure, you have enough money for a down payment and you would be able to afford closing costs, homeowners insurance, private mortgage insurance (if applicable), property taxes, moving costs and other expenses. If you assumed that everything would be fine, bought a house and then lost your job, you would be in trouble.