AND WHY IT’S STILL A GREAT TIME TO BUY DESPITE CORONAVIRUS

It may seem like chaos is reigning, but the truth is that opportunities are coming up and in the housing market, there’s still many reasons to buy. With COVID-19 changing how we operate around the world and shaking up the economy, it’s no surprise that real estate has also been impacted. But impacted doesn’t mean hit. Like many “crisis” and changes, there’s always those who can benefit. And whether you want to purchase for yourself or as an investment, this might be the right time.

What do 0% rates mean?

In what seems like an uncertain environment, and to prevent another market collapse, the government decided to cut Fed Fund rates to 0% in an attempt to stimulate the economy and make it cheaper for people to borrow money. However, this is the rate at which banks borrow money from each other and doesn’t really affect the mortgage rates the way people think. Mortgage rates are backed by securities and in an unstable market, they’re charging a risk premium on the investment.

Just a few weeks ago, the interest rates were at a 50-year time low. Yet, rates have been going up a little in the last few weeks. So, this doesn’t mean that banks will be handling money at 0% to home buyers.

By lowering the Fed Fund rates so much, bank rates are actually going up. This is the way bank’s investors protect themselves against unqualified buyers that may end up defaulting if the situation gets worse. However, this is just temporary and they’re still low.

Why it’s still a a great time to buy

Even with rates going up, these are still historically low. So, it is a great time to buy. And not only because of the rates. Since interest in purchasing a property has lowered due to uncertainty, in some states this could also be a great opportunity to negotiate price and not have to compete as much with other offers on the property. An uncertain market with an exceptional situation can be an opportunity for those who know how to take advantage of it.

House pricing in the COVID-19 world

One of the worries many have are home prices going down if we’re going into a recession. No one wants to buy something that will lose value. But some economy experts say you don’t have to worry so much about this because history shows that home prices tend to go up during recession times. Plus, debt-to-income-ratio standards for borrowers may change after we get through the current situation to make sure it’s not that easy to borrow. This already happened after the 2008 crisis and it would make it harder to qualify someone for a mortgage. Basically, the person who qualifies now may not qualify a year from now if they make those changes. So, if you are thinking of purchasing your first property, it’s time to take that step.

Overall, this is still a great time to purchase. You may still qualify, rates are still historically low, and a lower amount of competitors might make it easier for you to get the property you want, even in a state with low inventory and high demand such as Florida.

Why is the Florida market particularly good for real estate investments despite Coronavirus

Florida has low inventory and high demand. In the current situation with Coronavirus hitting markets with a surplus in properties like New York, Florida is still a promising territory.

Investment properties in the sunshine state go beyond vacation homes. Florida market is ripe for renting since there’s a shortage of rental properties due to the influx of people moving to the state. Hurricane Maria and immigration from Venezuela are some of the factors that accelerated the shortage of housing in the state. Also, the move of big companies and headquarters to areas like Central Florida, increased the demand in new properties for professional families moving to the area with their corporate jobs.

As of now, regardless of Coronavirus, the Florida real estate market is still strong and promising, and rates are giving buyers a unique opportunity.