There is so much information being given to home buyers and sellers right now, and that information seems to change daily. The federal government has designated real estate, title companies, and lenders as essential businesses, so the housing market is still “open for business” even during these stressful times. The one thing that homeowners and home buyers alike need to know is that this crisis is NOT the housing crisis of 2008. The housing crisis of 2008 was caused by the financial institutions themselves, which is not the case here.
As Chief Economist at Realtor.com, Danielle Hale wrote, “It will be different than the Great Recession. Things unraveled pretty quickly, and then the recovery was pretty slow. I would expect this to be milder. There’s no dysfunction in the banking system, we don’t have many households who are overleveraged with their mortgage payments and are potentially in trouble.”
There are several factors which actually make this time period an excellent time to purchase a home including interest rates.
- Increased GDP Forecast. The Goldman Sachs GDP Forecase states that the economy will hold steady with practically no gains during this period but say that the second part of the year will see increases in GDP growth with even more growth expected in the beginning of 2021. Just like the ebb and flow of the unpredictable stock market, this is an event which will incur temporary, one-time damages but is not going to be a full financial collapse.
- Recession – Not a Housing Crisis. Just because the economy is trending towards a recession, this doesn’t mean that the housing market is headed back to where it was in 2008. Home values tend to appreciate during recession periods if you look back at the last 3 out of 5 recessions in our country.
- The Housing Market Is Not the Cause. Last time, the mortgage and lending institutions, as well as the housing market itself was the CAUSE of the Great Recession. It was a bubble which finally burst, leaving economic chaos. We know for certain that this is not the case, that lending institutions were doing better than great before this pandemic, and that nothing about financial investments in real estate will be directly impacted (possibly indirectly impacted in certain sectors) by this crisis. It’s too soon to say that everything will return completely to normal once this virus has run its course, but any investment in real estate right now would be a fiscally smart idea.
The Fed dropped the interest rates, and mortgage interest rates have been affected by the swings in the stock market. However, if you work with a savvy lender, you will be able to catch the lowest interest rates since 2009 and 2010 on a home loan right now. If you need guidance on a new home purchase, a purchase of an existing home for sale, or on getting your financing together, The Kelly Waltemath Group is here to assist you with all of your home buying needs. We also offer extensive Virtual Services to keep you safe during your purchase process. Call 504-236-8587 or email KellyWaltemath@gmail.com to schedule your virtual appointment today!