But what impact is coronavirus and its rapid spread having on the housing market in this country, and what can we expect? A lot remains unknown at this point, but there are a few things you should be thinking about if you’re looking to buy, sell, invest in real estate, or refinance an existing loan.
Carefully consider new construction
One of the fears associated with coronavirus as it relates to the housing market: supply chain issues. If building materials are held up, it could seriously impact the timeline of new builds. “Homebuilders rely on China, where the coronavirus or COVID-19 originated, for construction materials and any disruption in the supply chain could impact their ability to deliver much-needed new inventory into the market,” said Yahoo! Finance. If you’re set on buying a brand-new home, be sure to ask the builders you’re considering what the impact could be.
“About 30% of building products imported to the U.S. come from China, including both residential and nonresidential construction, according to Richard Branch, chief economist for Dodge Data & Analytics,” said MSN. “The products include wallboard, lighting, and other materials. Homebuilder Toll Brothers recently said the coronavirus outbreak in China led to shortages of lighting fixtures and small appliances, forcing it to delay the sales of 11 homes in California.”
You also may want to look to builders and communities that have standing inventory. That means homes were built before they were sold, so they are move-in ready, brand-new, and have never been lived in. You will have to live with the finishes that were pre-chosen, but, in many cases, you’ll get nicer and more expensive finishes than you may have been able to afford otherwise.
Think twice about remodeling or renovating
Those same supply chain issues that are impacting new-home construction may also make it more difficult and/or expensive to renovate.
Reconsider open houses
As the coronavirus continues to spread, people are reconsidering their exposure to multiple people. If you’re selling your house, that may mean limiting showings to individual families instead of holding open houses. You may feel it’s necessary to follow the same precautionary measures if you’re looking for a home, opting to tour homes individually instead of attending open houses.
Refinance!
“Mortgage rates in the United States have fallen to the lowest level ever on the heels of concerns stemming from the coronavirus outbreak. The 30-year fixed-rate mortgage dropped to 3.29% during the week ending March 5, a major decrease of 16 basis points from the previous week,” said MarketWatch. “The decline in rates presents a major windfall for millions of homeowners across the country, who stand to save thousands of dollars in interest by refinancing. Furthermore, an estimated 44.7 million homeowners have $6.2 trillion in home equity that they could access through a cash-out refinance, according to real-estate data firm Black Knight, and now they have the chance to access that cash at a lower interest rate.”
Put your money in a safe place
Treasuries are hot, stocks are not. As Yahoo! Finance pointed out, “The coronavirus has sent stock markets plummeting and no industry, including housing, is immune. Mortgage rates are hitting multi-year lows as investors, fearful of a possible coronavirus pandemic, have flocked to safe havens like Treasuries, sending the 10-year Treasury note to a record-low yield.”
Look at rental homes as investments
That’s what foreign investors are doing. With instability in the stock market and overseas investments, “Investors are looking for the calm in the coronavirus storm, and U.S. residential real estate appears to be it, specifically single-family rental homes,” said CNBC. “These investors are not, however, coming to the U.S. to tour the homes themselves. They’re buying them online. Roofstock, a 5-year-old California-based fintech company, lists single-family rental homes for sale on its website, most with tenants already in place. It also offers management services, so the investor never has to visit the property. In the last few weeks it has seen traffic from investors in Asia on its site jump 500%. Roofstock noted a 450% jump in traffic on its site from investors in Germany, a 250% surge in traffic from Australia and a 100% increase from the United Kingdom.”
But reconsider short-term rentals
If you were in the midst of looking at purchasing a short-term rental, you may want to take a step back for now. “With the potential for summer vacation plans being canceled, owners of Airbnb, VRBO and other short term rental platforms facing cancellations could be in a quandary,” said HousingWire.