What better advertisement for residential real estate than a government-mandated sheltering in place? While that seems ancient history now, our homes were required (and still are) to function as offices, meeting rooms via Zoom calls and classrooms.
Add to this low interest rates, and buyers have multiple incentives to act now. Below are five reasons why your buyers should pull the trigger. Keep this list handy next time you deal with a hesitant homebuyer.
1. Unprecedented importance of home
Mark Twain once said, “One may make their house a palace of sham, or they can make it a home, a refuge.” The minute the outside world started to shut down, home as a place of refuge became more important than ever before.
As our way of life changed to focusing on being at home, we became conscious of the pros and cons of our living situation. Forced to adapt, we made alterations to our living spaces and reorganized, and in doing so, we became sensitized to the quality of sunlight, air, sound and the amount of space we had to work with.
This time at home has motivated many homeowners to assess their immediate surroundings and consider upsizing or downsizing — or moving to a new environment altogether. Relocation to more suburban and rural areas has more appeal now that urban areas are viewed as congested and incapable of offering city dwellers the features they took for granted.
2. Home repairs and renovations while sheltering in place
Stimulus checks combined with money homeowners saved that would’ve otherwise been spent on travel, entertainment outside the home and shopping trips have been reinvested in home improvements.
Homeowners who were forced to stay indoors were able to take advantage of these funds to reinvent their homes and add features that many buyers find attractive. Home gyms, entertainment centers, outdoor recreation areas, and upgraded kitchens and baths not only make sellers’ at-home life more comfortable, but they also appeal to buyers.
Upgrading lighting, adding green resources such as solar panels and turning basements into recreation rooms have been the focus of homeowners while sheltering in place. These improvements will definitely increase salability.
3. Inventory of homes for sale
When the real estate market was shut down in my market and many others, sellers who were motivated or had to sell had very little opportunity to attract buyers. While home sales did occur due to photography and videos, and buyers did buy properties without visiting them, this was not the ideal approach to purchasing a home for the majority of buyers.
Prices are negotiable now, particularly for sellers who need to move or who have already signed contracts for new residences. Currently, some homes are staying on the market longer than before the shutdown. Builder confidence is growing as the economy rebounds.
4. Low interest rates
Banks rely on agents transacting business to keep a large portion of the economy moving. Mortgages are one of the primary sources of income for banks, which they can’t survive without.
Conforming loans under $760,000 — which are not kept on the banks’ books, but are sold to Fannie Mae and Freddie Mac — are the bread and butter of most banks given the number of properties traded in this price range.
Jumbo loans, in excess of $760,000, of course, result in higher income for the banks. To stimulate mortgage activity, the Federal Housing Finance Agency lowered interest rates. The lowered interest rates have motivated current homeowners to refinance mortgages and first-time buyers and new homeowners to apply for mortgages.
5. Motivated sellers
The health crisis has made many longtime homeowners consider retirement rather than returning to places of employment, which they now consider to be health risks. Families with small children have been compelled to consider less congested school districts or private schools.
Sellers who need to close before the end of 2020 for tax purposes are also extremely motivated to have their homes in contract. The uncertainty of a vaccine’s development and distribution is a factor in any current real estate transaction. Real estate market activity is affected by multiple factors including the economy, politics, job market and buyers’ perception of value.
The time for buyers to act is now, while interest rates are low and the economy is gaining strength. Varied inventory is available for buyers who are ready to act. The housing industry relies on supply and demand, both of which are presently strong.
Moving forward, real estate is predicted to make a strong recovery in spite of the current uncertainties in the economy, politics and health. Working with an experienced and qualified agent is the smartest move an intelligent buyer can make in the present market — and it’s your job to convey that to your buyers.
Gerard Splendore is a licensed associate real estate broker with Warburg Realty in New York. Connect with him on LinkedIn.