It’s no news that the past few months have completely transformed our world—from the way we work to the way we interact with loved ones. In order to survive a global pandemic, we have all been forced to adapt to a new way of life—one that’s filled with remote work and virtual interaction that spans much more than a 6-foot distance. While professionals across practically all industries, from travel and hospitality to retail and real estate, are frantically trying to shift strategies and minimize impact, there’s no way to avoid it completely. For real estate specifically, timing hasn’t been on our side. With the global health crisis hitting in spring—real estate’s much-awaited peak season—the effects can be felt throughout the industry with everyone from real estate agents to contractors affected.
As millions continue to file for unemployment, buyers and sellers are feeling more and more financially insecure, causing many to hold off on significant changes in living conditions. To help, HUD declared a ban on foreclosures and evictions for single-family homeowners with federally backed mortgages, and foreclosure initiations have been delayed for borrowers unable to pay their mortgage due to COVID-19. Additionally, while real estate has been deemed essential, social distancing and shelter in place guidelines have contributed to a decrease in in-person interactions, including home tours and live auctions. Needless to say, buyers, and even sellers, have become more hesitant than ever.
With uncertainty at its peak, it’s more important now than ever to understand what the future may hold. Here’s some insight into what real estate investors can expect for the remainder of the year.
Interest Rates Remain at Rock-Bottom
Real estate investors currently have the unique opportunity to take advantage of record-low interest rates. For reference, according to Bankrate, interest rates are currently as low as 3.59 percent. Not only could lower rates save you thousands, they could also multiply your chances of finding (and purchasing) the right investment property. Additionally, as interest rates decline, lenders also tend to ease their requirements, offering additional opportunities to borrow the funds needed to finance an investment. Fewer financial barriers could indicate the right time to invest in a new auction property with the possibility of long-term profitability.
In addition to lower interest rates, the federal government is also trying to revitalize the economy through a federal stimulus package announced in late March. If you met the requirements to receive a stimulus check, these additional funds could help you finance a bid deposit or repairs on a fixer upper.
Embracing Technology Will Be Essential
As gatherings of 10 or more people continue to be discouraged, live auctions and in-person home tours have come to a halt. On the flip side, online auctions and the use of technology have become necessary to continue real estate transactions during this pandemic.
Long before the COVID-19 crisis, Hubzu has allowed users to virtually browse thousands of properties, find upcoming auctions and bid online—all from the comfort of their homes. Furthermore, investors can choose to buy properties with or without an agent, as they have the tools to find property details on the site, communicate directly with sellers and in some cases, opt for a self-showing and access the property independently through a lockbox. After finding the right property, the purchasing process is also virtual, allowing you to accept payments and sign documents electronically. These virtual resources not only offer a safer alternative to in-person real estate transactions but also make the process much more efficient—pandemic or not.
A New Peak Season
While spring and summer heat up the real estate market along with the temperature, we can look forward to a new peak, at least for 2020. If current conditions improve by the end of the year as expected, real estate professionals (including agents and investors) may see a much busier fall season. Buyers and sellers who may have put off their real estate transactions will be ready and able to jump back in. Plus, the current delayed foreclosures may cause a surplus of occupied properties in the months to come.
As circumstances continue to improve, so will home buying and selling behaviors. Make sure you stay updated now to ensure you’re ready to seize the upcoming opportunities and add value to your property portfolio.
For additional resources to help you navigate the current real estate market, please visit our COVID-19 resource hub by clicking here.