This spring is shaping up to be an unprecedented time for everyone. As the coronavirus continues to sweep across the globe, real estate investors are left wondering where the US housing market is headed amidst this pandemic. The only thing we are sure of is that this will likely drag out until the summer at the very least. So how should real estate investors navigate this market? What is the coronavirus global impact on investment properties? Will the market be a buyer’s or seller’s market? And what are some of the strategies that you should implement in order to mitigate the effects of COVID-19 on your real estate business? Scroll down to discover the valuable tips that will help you wade through the spring real estate market 2020.
Related: Will the Coronavirus Cause a Repeat of the 2008 Housing Crisis?
Understanding the Impact of the Novel Coronavirus on the Spring Real Estate Market
As you surely know, this pandemic is having a significant impact on every single sector. While it is still unclear to which extent it will affect the US housing market in the long run, we can safely assume that a few trends will be witnessed during the spring real estate market. Below is a brief real estate market forecast for this peculiar period.
1- Some regions will be more impacted than others
The real estate market trends that will dominate the spring will vary from one region to the other. For example, short term rental markets that rely on tourism will be severely impacted by this pandemic as demand for these rental properties has already plummeted. Having said that, every region will feel the effects of this pandemic to a certain extent. The stock market crash, as well as the loss of millions of jobs, will slow even the hottest real estate markets for a few months.
2- Housing inventory will drop in most real estate markets
One of the safest housing market predictions that we could make is the low housing inventory that will characterize the spring real estate market. This is inevitable as the lockdown measures have halted the supply. Moreover, inventory was trending downward even before the pandemic, so the current circumstances are likely to impact it even further.
Related: Searching for Property in a Low-Inventory Real Estate Market: 6 Tips
3- The spring real estate market may favor sellers
The low inventory coupled with the high demand for investment properties could create a favorable environment for sellers. This is especially the case in large markets such as Los Angeles and the Bay Area housing market. Needless to say, real estate investors should expect stiff competition in these markets and real estate bidding wars are pretty much inevitable.
On the other hand, it depends on who is selling. Currently, sellers who are not in need of a quick sale have pulled their listings. If only motivated sellers remain in the real estate market in the spring, it’s possible that even with low inventory, buyers may enjoy some price reductions. This is if some buyers continue to sit on the sidelines in the spring, reducing competition.
So how should investors approach the 2020 spring real estate market? The next section will share with you a few tips that should help you navigate this pandemic.
4 Tips to Navigate the Spring Real Estate Market in 2020
As you would expect, buying investment property during a pandemic can be challenging. The fear and panic that swept the nation have made finding profitable and affordable real estate quite difficult. Still, there are plenty of opportunities that savvy real estate investors can capitalize on. Here are our tips for buying rental property in the spring real estate market.
Keep in mind that real estate has been deemed an essential business in only some states in the US housing market. Be sure to check on local regulations to ensure you are allowed to participate in real estate activity during this time.
1- Look for real estate agents that offer virtual tours
Real estate agents are reacting differently to the coronavirus. While some have opted to hunker down for a while and wait for this pandemic to blow over, others have decided to get creative and incorporate other methods into their daily business. A good example of this is virtual open houses. As the name suggests, this is when a real estate agent walks a client through a property via a live video stream. Naturally, the first step of buying investment property in the spring real estate market is to retain the services of an agent that offers virtual tours. Find a real estate agent here.
2- Secure your investment property financing early
Securing your financing at the start of the buying process is a sound decision regardless of market conditions. Having said that, this step becomes extremely important when you are trying to buy in a housing market that has essentially come to a full stop. In fact, closing a real estate deal is now lengthier and more challenging and lenders are overloaded with refinancing applications and mortgage waivers. To avoid any potential delays, you should talk to your mortgage provider before your offer is accepted by the seller.
Related: Coronavirus Impact: Is It Hard to Get a Mortgage Right Now?
3- Explore ways to reduce your closing costs
Like we mentioned above, there is still some degree of uncertainty surrounding the effects of this pandemic. As a result, you need to make sure that you are not spending more than what you should on an income property. A key component of ensuring that you remain within a reasonable budget is reducing your closing costs. Here are the options that are available to you when it comes to lowering your closing costs in the spring real estate market:
- Package the costs with your loan.
- Apply for an FHA loan if you are eligible.
- Negotiate a favorable split with the seller.
- Ask your bank whether or not their loyalty program covers closing costs for buyers.
4- Focus your investment property search on the least affected areas
The most pressing question that investors have right now is where to invest in real estate in spring 2020? The answer is fairly obvious. The best places to invest in real estate at the moment are the cities that are least affected by the pandemic. These markets will rebound quicker and house prices will be less volatile relative to other areas. Examples of cities that are poised to make a quick recovery include Seattle and Portland.
The Bottom Line
Buying during a pandemic is not without its challenges. Still, profitable real estate investments can always be found during the times of crisis and investors who stay resilient through it all are guaranteed to reap long-term rewards. Above all else, be sure to practice safe social distancing if you do enter the real estate market in the spring of 2020. Be sure to use the Mashvisor Property Finder to start looking for investment properties right now from the comfort of your own home.
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