COVID-19 has impacted all ways of living and the housing market is no exception. However, unlike most aspects of life, the pandemic has had a relatively positive impact on housing.
Loan Officer Michael Walter detailed why the housing market saw a positive upturn while the rest of the economy doesn’t.
“Typically when the economy struggles, the real estate market usually propels,” said Michael Walter.
Rates are at an all time low, causing buyers to purchase up real estate in mass. This reaction, in turn, helped to get the economy back on its feet after dipping into one of the worst recessions the U.S. has seen.
Real-estate agent Joanna Tarnawa talked about how and why the markets were so great for purchasing and selling a home right now.
“There’s a lot of eager, eager buyers because of the historically low rates, because of the fact that they need more space and then you have got sellers who are getting great prices for their houses because they are able to ask for a premium,” Tarnawa explained.
Housing loan interest rates, according to Walter, have gone down over 2% in the last two and half years. A person with good credit would have seen interest rates drop from about 4.75% in 2018 all the way down to about 2.5% today.
New home owner Jessie Dickerson talked about just how thrilled she was to purchase her first home.
“The housing market, the interest rates are phenomenal. I think we got a 2.5% interest rate,” said Dickerson.
Although interest rates remain low and the housing market is doing well as a whole, there is one major problem that has emerged due to the pandemic.
This problem is called “Forbearance.” Forbearance is a practice employed by a loan servicer during times of crisis that allow home owners to delay their mortgage payments for months. On the surface forbearance is not necessarily a bad thing, but with this comes the often unknown consequence that all the payments that the homeowner skipped will be due at once.
Walter explained how forbearance can really hurt and set back a homeowner if not handled properly.
“People who can afford to make their mortgage payments said ‘heck yeah I don’t want to make my payments until September,’ and what has happened is now that time has come and gone and they’ve skipped six or seven payments, now the bank is telling them ‘Hey you owe us 15 grand to catch up.’”
This practice is common and can be very helpful for those who comprehend it, but is also devastating to those less experienced in the real estate world. This is the “worst problem” facing housing at the moment, according to Walter.
Despite this issue, Tarnawa and Walter are both optimistic about their businesses right now and have both expressed that they are as busy as they have ever been right now due to the great rates.
The optimistic nature of the housing market has been a significant silver lining during this pandemic.
