Have you been paying attention to the real estate market, doctor? We’re in some unprecedented times, experts say and data indicate. Interest rates are bottoming out, which might make you think it’s a buyer’s market. However, there’s less housing stock than there was a year ago, which is typical of a seller’s market. Physicians looking to enter the market for either the first time, or perhaps to purchase another home, face some unique challenges. First and foremost, there’s the health risk. How does a buyer safely buy and a seller safely sell a home right now? Virtual showings are an option, but most people wouldn’t buy a car without test driving it. Would you sign a 30-year mortgage without taking a few tours? Robert Lopez, a real estate agent with more than 22 years of experience, says that this is one of the current complicating factors he’s seeing due to the virus. ‘Sellers are anxious’ “Sellers who have to put their home up for sale are anxious,” Lopez says. They’re requiring potential buyers to wear masks, gloves, and keep a half-hour between appointments. This, he says, is driving down the number of showings, and consequently, sales. The housing stock is substantially thinner than last year, data show. Realtor.com’s weekly inventory data shows that last week’s active listing count was down 23% and the new listing count fell nearly 23% year-over-year. The median number of days those active listings have been on the market has increased by nearly 30%, compared to 2019. Listings that had reduced prices were down by 41.5% compared to 2019. Redfin data illustrate similar trends. Their year-over-year new listings are down about 22%. Sale prices are up by 5%. New listings for April fell 41% year over year. The number of homes for sale in April also fell by 21% year-over-year. But recent data doesn’t tell the entire story, Lopez says. “We judge home inventory on a calendar basis,” he says. “Home inventory has been down for almost 2 years. COVID-19 simply threw another wrench into the circumstances.” The question that remains, he says, is just how big of a wrench will it be? ‘We’re really busy’ On the mortgage side of the business, things look slightly different. One might think that COVID-19 has done little to deter homebuyers in recent months. During the last week of May, mortgage applications were 137% higher than they were the same week in 2019, according to the Mortgage Bankers Association (MBA). The same news release from the MBA goes on to explain that the uptick in applications is a byproduct of “pent-up demand from homebuyers returning to the market.” Patrick Kelly, a mortgage lender with 30 years of experience, says the data are aligned with what he’s experiencing with his clients. “We’re really busy,” Kelly says. “Falling interest rates have inundated our entire industry with refinances. And, I’ve actually been surprised by all of the purchases in the last two months.” So, what kind of market is it? Is it a buyer’s or a seller’s market? It’s a hybrid market, Kelly says. “It’s a seller’s market in the sense there’s not a ton of inventory,” he says. “Buyers are being outbid during multiple-bid offers. The downside is that appraisals have been coming in tight, causing renegotiations after the fact. At the same time, it’s a buyer’s market because the rates are so low.” Lopez has a similar view. On the surface, he says it looks like a seller’s market, due to low inventory. Also, lenders are willing to lend and interest rates are low. However, how willing are buyers to buy, risking COVID-19? And will sellers sell, knowing that they’ll have to bring strangers into their homes? Both factors, he says, are slowing the sales process and possibly suppressing sales themselves. Furthermore, though housing stock scarcity makes this a seller’s market, in theory, sellers are actually anxious to sell, Lopez says. In his local market of central New Jersey, which is typically a high-demand area, he says that home prices have actually gone down because sellers want to close sales before COVID-19 potentially gets worse. Physician buyers Physicians who are serious about buying right now have several advantages. Kelly explains that high-earning potential makes borrowers more likely to extend credit. They’ll even factor in residency wages when determining loan amounts. If a doctor wants to buy, they should know their spending target and come in with several preauthorizations above and below that target amount. In this fast-and-furious market, you do not want to lose a house because of paperwork. Lopez likes how the market looks for first-time buyers in particular, many of whom may be living with family members who are at-risk for the virus. Low interest rates and stimulus checks to cover closing costs are good motivators to become homeowners, he says. “I don’t know if there’s ever been a better time for first-time homebuyers to buy in my career.” TL;DR COVID-19 is making buyers and sellers anxious. Additional precautions may be slowing the buying process. Housing stock is down. But it’s been down for about two years. Mortgage applications are up. And interest rates are very low. In one way, it’s a seller’s market due to low inventory. In another, it’s a buyer’s market, due to availability of credit and low interest rates. Source
