High demand, low interest rates make for perfect housing market
ST. JOSEPH COUNTY, Ind. - This pandemic has shown people how important their homes are, especially since so many have been stuck inside theirs for months.
Now as states are reopening folks are starting to get more comfortable taking that next big step
ABC57 is working for you and continuing our coverage on the lasting impact of the coronavirus on different industries and businesses post-pandemic. Monday, we took a look at the housing market.
Low-interest rates and limited inventory (or houses on the market) create a perfect storm where there are both a buyer’s and a seller’s market right now.
Buyers can afford more, and sellers can get their homes sold faster.
But will this continue in let’s say 6 months?
Ryan Johnson and his family have lived in their house in Mishawaka for nearly 15 years but due to some unforeseen circumstances, he’s now being forced to sell his home during a pandemic.
“We are selling because the house is being foreclosed on and we are trying to beat the foreclosure by quick-sale,” Johnson said.
Like many families who have hit hard times, Johnson and his have been thrust into the real estate market. But he had no clue that now is actually the best time for him to sell his home.
“It's kind of a weird storm because it's great for buyers but it’s great for sellers,” Allen Stewart, a Broker for Stewart Realty said.
Stewart has been a broker locally for 22 years and even this is new to him.
“It's kind of a unique thing that we've never seen before,” he said. “The economy has tanked a little bit. And of course, interest rates have dropped to the lowest in the last three or four years.”
With interest rates around 3%, Stewart says if you buy a home now you will get more bang for your buck.
“For the buyer, you know, if the interest rates are low one, they can probably buy 20 or thousand 20 or $30,000 more. So if they can qualify for 100,000 at 5% they Probably qualify for $130,000 house at three and three and a quarter percent. So they can buy more,” he said. “The amount of money they save over just the interest rate alone. Over a 30 year mortgages thousands of dollars.”
It’s not just a good time to buy a home, Stewart says it’s also the perfect time to sell your home.
“Right now, there are buyers out there because the interest rate is so low, but there are not enough houses to buy,” he said.
Because there is not a whole lot of new construction of home and folks are reluctant to put their house on the market, it has led to an inventory shortage.
“We went into this pandemic, with our inventory throughout the state really throughout the country being extremely low. That's been a little challenging for us to navigate over the last few years,” Bernice Helman the President of the Indiana Association of Realtors said. “But right now that's been really a saving grace. Because the inventory is so low, that means we have a really high demand right now. So homes that are hitting the market are moving relatively quickly, prices continue to increase.”
And sellers might also get more money for their home than they would have let’s say last year.
“There's a lot of buyers out there so they can get their house probably more so for more money because of the competition, and they can sell quicker,” Stewart said.
“Oh, great response! I’ve had people… the house was on the market approximately a half-hour and we had three hits,” Johnson said.
For Johnson, this is the saving grace he and his family has been waiting for.
“We put the house on the market I would say not even a month ago and we get approximately 5 showings a week if not more,” he said. “That’s really good.”
Helman says they are seeing more business than ever.
“We've been really pleased with the way our industry has been able to navigate this pandemic. If you look year over year, our sales are actually up about three percent over where we were last year at this time. So we feel really good about that,” she said. “Specifically, St. Joe county is even a little better than what the state averages your markets running about 8% over where we were last year at this point in time.”
Brokers and real estate agents are adjusting to a new normal as Michiana rebounds.
“We utilize online, electronic notarization so that we can actually do virtual closings. There's no need for there to be, you know, six or eight people in a room together. Now we've been able to further leverage our virtual and visual tours and to do that Virtual open houses, all of our documents can be signed electronically,” she said.
But what will the real estate market look like post-pandemic? Stewart isn’t too optimistic.
“There's that fear, you know, because hey, people weren't just working for like a month or two months,” Stewart said. “So they're like, I might want to you know, hold off or wait to make Sure the economy a solid again. But when they do that, the interest rates are going to start going back up.”
He says that once people feel comfortable to get into the housing market, it might be too late.
“There's a limited window here probably a couple of months, probably six months at the most by the end of the year the interest rates will start going back up again,” he said.
“So all things as they are today, we expect to move forward and have a really strong year. The question remains, will there be another outbreak, you know, how does that impact our market and we simply don't know that,” Helman said.
And although Johnson hasn’t sold his home just yet, he is hopeful.
“I’m hoping to yes,” Johnson said. “It’s very important to sell.”
So the main takeaway if you are trying to buy or sell your home, now is probably the best time to do so.