A Glimpse of Home Buying During the COVID-19 Pandemic
Despite the pandemic, there’s still some demand for homes. It’s not as high as it normally is, but it’s there. However, lockdowns and social distancing have forced the real estate industry to adapt.
For instance, the National Association of Realtors (NAR) officially recommends that only one buyer should enter a home during tours. Physical distancing of up to six feet should also be observed. If you’re planning to bring kids, that won’t be allowed since NAR recommends against it.
If you’re planning to visit housing developments or go to home showings, take note of the following below.
Digital tours and closing
The first obvious thing to expect is virtual tours. Social distancing protocols and sanitation requirements have forced entire industries to resort to technology amid the pandemic. Real estate is no exception.
Nowadays, it’s reasonable to expect your agent to use video when walking through a home showcase. Many brokers and other real estate professionals are already making use of 3D home tours and platforms like Zoom and Skype.
Additionally, you might also not be able to be physically present at the closing table. This will depend on the lender you work with since not all of them offer e-closings.
On the plus side, though, with e-closings, you can sign documents and conclude the transaction safely from a distance.
Frequent employment verification
To mitigate risks, several lenders are now extra diligent when it comes to verifying your employment status. On the one hand, this move makes sense since the US labor market is currently undergoing a tremendous amount of stress.
Lenders are checking employment status multiple times. So aside from the usual single employment check, companies may also call up your employer at any time. Some may even ask you for an updated direct deposit statement to ensure that you’re still earning income.
This is something to look out for, especially for those who have a reasonable amount of money in the bank but just recently got out of a job.
Higher cash down payments and tighter standards
To further shield themselves from risk, some lenders now require a higher down payment.
Loan forbearance requests have been increasing since the pandemic began, and lenders want to prepare ahead—in case delinquencies start. Some companies are also requiring higher cash reserves on the part of borrowers.
Across the industry, lenders are also strengthening credit standards to adapt to uncertain times.
For buyers, this is another layer that should be factored in when mulling over home options. Additionally, this may not bode well for first-time homebuyers. Several organizations that provide payment assistance to the latter have either revamped guidelines or suspended assistance programs indefinitely.
Fewer homes to choose from
Across the industry, there are fewer and fewer homes to choose from.
Data from Zillow, the online real estate database company, reveals that new listings have gone down by 27 percent compared to 2019. In addition, the number of active listings is also down by 8 percent.
This might be a problem for homebuyers who prefer having to go through a number of options before deciding on an ideal home. On the other hand, this could reduce the time needed to go through a number of listings—helping homebuyers find what they need much more quickly.