Thinking about buying a home? You’re not alone.
The National Association of Realtors reports that in July 2020, sales of existing homes were up 24.7% over the previous month. Meanwhile, the construction industry is booming as new homes are being built at a rapid pace to meet buyer demand.
Still, there’s a lot of uncertainty in the world, between the ongoing pandemic, increasing social unrest, and an upcoming presidential election.
Among our clients at Lake Road Advisors, we’ve seen many who were in the process of saving for a home, who are now questioning major life transitions like a big move or a big change in living situation.
So if you had been saving up to buy a home, you might be wondering if 2020 is the right time to buy… or if it makes sense to keep saving. Here’s what to think about to help you make the right decision for your situation.
1. Don’t Rush to Decide
The very first thing to do might just be… to do nothing at all. I know it sounds counterintuitive when it seems like the entire world is in a frenzy, and perhaps you know many friends, family members, or coworkers who are scrambling to buy a home right now.
But this is exactly why it may be a good idea to step back and take a moment to breathe. You don’t want to make major life decisions while you’re wound up or highly emotional.
If you feel like you simply can’t wait, keep in mind that you’re not likely to miss out. Interest rates are still at historic lows and there is no sign of any upward inflationary pressure, so you can probably still take advantage of a great mortgage rate even if you don’t buy tomorrow.
Make sure you have clarity on two things: what you actually want to do, and what your finances say you can do. From there, you can proceed. Just don’t get in a rush (or worse, a panic) to make long-term choices based on what will, in the grand scheme of things, likely be more of a short-term situation that lasts a few years rather than forever.
2. Consider Your Location
The pandemic has forced a lot of people to rethink their living situation as well as where they live.
Almost every business that could, shifted their workforce to operate remotely. Many could remain that way, even after we have a vaccine and can shift into a post-COVID world. But the work-from-home shift has also put pressure on families who previously relied on in-person school and childcare.
Before you completely change your plans and move halfway across the country just because you can now work from anywhere, you might want to think about the impact of support (or lack thereof) of your local network, of friends, and of family.
It might also be worth waiting to buy the house you’ve been saving up for until your work or childcare options are more clear. Not all businesses will let their employees work remotely forever, so you may not want to assume that just because you can work from anywhere today means you won’t need to be in an office sometime until 2021 or 2022.
On the flipside, there may be less need to be in the heart of a major city and you may be able to consider a longer commute if at least some of the workforce staying remote means less traffic and a shorter trip to and from the office when you have to return.
Finally, now might not be the best time to flee to the suburbs considering many, many people are doing just that and metro area housing markets are currently hotter than ever.
Clearly, there are many angles to consider on this aspect of the decision. The bottom line? Don’t neglect considerations of location when thinking about whether now is the right time to buy.
3. Think About Your Timeline (and Update It If Necessary)
If you’re like many people, perhaps the pandemic didn’t change what you wanted, but it did alter the timeline you had in mind before the virus.
As Scott Galloway writes, “Things won’t change as much as they will accelerate. While other crises reshaped our future, COVID-19 is just making the future happen faster.”
Even if COVID-19 didn’t set us on a dramatic new course, and rather, just sped up our trajectory toward what we were already headed for, chances are that there will be many new norms in the future.
However, all information points to this being at least another one to two years as the status quo. With that in mind, you don’t have to shelf the homebuying conversation forever. It may simply make sense to delay it slightly until we have a bit more clarity on what our future holds.
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