The coronavirus and COVID-19 have altered almost every aspect of our lives, from the business landscape to entertainment to schooling. And real estate and the housing market in Salt Lake have by no means come through unscathed. Real estate is still chugging along, of course, but there have been some changes – changes that both buyers and sellers need to be aware of. So let’s take a look at 5 ways coronavirus is impacting the housing market in Salt Lake.
1. Low Mortgage Interest Rates
One way coronavirus is impacting the housing market in Salt Lake can be readily seen in interest rates at near historic lows. And this in turn has led to many homeowners refinancing to take advantage of these rates.
Here’s how low-interest rates are affecting the housing market in Salt Lake: “On March 15, the Federal Reserve announced another emergency interest rate cut that brought the primary credit rate to .25%. This cut comes amid already rock-bottom mortgage rates, which have been dipping since the beginning of the outbreak in late 2019.” And this means that “owning property is more affordable than renting in almost any location in the country.”
Low mortgage rates have also led to more homeowners refinancing existing mortgages to benefit from the low rates. The result is a more competitive market because a good number of people who would formerly have been in the market to buy a new home are now refinancing instead. In fact, there was a 40% increase in refinancing applications from January to February of 2020.
2. Business NOT as Usual
Another impact is that business is definitely not being conducted as usual in the real estate arena. Coronavirus has forced buyers, sellers, and especially agents to rethink and adjust the way they handle operations and conduct the various parts of transactions.
Coronavirus is impacting the housing market in Salt Lake in that virtual tours are supplanting the traditional in-person open houses and showings. In addition, there is a move toward increasingly more remote closings. All this comes as a way to reduce exposure to and the risk of contracting the virus.
3. Foreign Investors Entering
A (perhaps) surprising way coronavirus is impacting the housing market in Salt Lake is in the increasing number of foreign investors entering local markets. “Chinese investors dominate international activity in the U.S. residential market. . . . [A]although COVID-19 could have a significant impact on investor activity in general, it may have a positive impact on real estate investments since they tend to be less volatile than the stock market.”
Typically, when the stock market takes a downturn, investors turn to hard assets like real estate. Residential real estate, then, is becoming a more attractive choice for long-term investors. And this is good news for sellers.
4. Uncertainty Rules
One thing that can be said with certainty is that uncertainty now rules – no less in real estate than in any other aspect of life after COVID. Here’s what industry experts say about how coronavirus is impacting the housing market in Salt Lake:“ [T]hecoronavirus has changed everything, and new details every day alter what the landscape for homebuying could look like after the pandemic passes. While studies of previous pandemics suggest that home prices won’t drop all that much, the economic fallout of COVID-19 could be sweeping.”
Some of the major uncertainties in the housing market in Salt Lake buyers and sellers will have to deal with are:
- Prolonged payment suspension causing “chaos in the mortgage industry, ”leading to a “liquidity crunch”
- Lenders lacking capital to lend to potential home buyers
- The disappearance of subprime and specialty mortgages, ‘which would make it harder for people with less than perfect credit to qualify
- The possibility of the mortgage industry’s quick recovery – or not
- A volatile stock market that is almost impossible to predict
- An economy that isn’t likely to rebound soon, possibly decreasing demand (good for buyers, but not sellers)
5. A Good Agent Is More Necessary Than Ever
The upshot of all this is that a good local agent is more necessary than ever. Since the full impact of coronavirus is still largely unknown, making informed real estate decisions is tougher than ever. Keep in mind these uncertainties and points about how coronavirus has affected the housing market and how it will continue to do so:
- “COVID-19 has surpassed 200,000 confirmed cases — a number that will continue to rise quickly.”
- “The residential real estate market remains fairly unchanged, but economic shifts could impact the housing market in the future.”
- “Investors and homebuyers can take advantage of lowered interest rates, and existing homeowners could consider a refinance.”
So, yes, coronavirus is definitely impacting the housing market in Salt Lake, but one thing remains unchanged. And that is for buyers and sellers the expertise of a good Salt Lake agent is needed now, during this time of upheaval and uncertainty, more than ever. Our experienced agents are ready to give you the help you need. Send us a message or give us a call today at (801) 755-3865.