How Is COVID-19 Impacting Real Estate Investing
Mortgage rates are always fluctuating, and the spread of the coronavirus, COVID-19, has only led to more unpredictability. The coronavirus is the topic on just about everyone’s mind today, and many have an almost infinite amount of questions regarding how it will impact every facet of our lives.
In addition to impacting our general way of life, COVID-19 is also affecting the global markets, and it will most likely affect the real estate market in the U.S. in the immediate future.
Plummeting Mortgage Rates
While the market has experienced slight increases, mortgage interest rates have seen a significant decrease as of early March. Another factor that will impact the market to some degree will be the lack of buyers from China.
Previously, China was the biggest source of foreign demand for U.S. real estate, according to the chief economist for the National Association of Realtors (NAR), Lawrence Yun. As a result of the absence of Chinese buyers, Yun told Realtor.com, “The upper-end market can expect to be softer.”
The main reason for the impact on the upper end of the market is that Chinese buyers tend to buy luxury properties in cities such as New York City, Los Angeles, and Miami. Travel restrictions are the main culprit behind this decrease in buyers from China, as buyers who would ordinarily still travel to the U.S. to purchase real estate have strict limitations in place.
An All-Time Low in March Encourages Refinancing
In March of this year, the U.S. mortgage rates hit their lowest point as, according to Freddie Mac, the average 30-year mortgage rate decreased to an alarming 3.29 percent. That percentage is even lower than the recent low reached in 2012.
One advantage of the decrease, according to financial experts, is the ability for current homeowners to refinance their existing mortgages and pay down loans even quicker. Ultimately, many homeowners will be able to save some money through refinancing.
A Potential Long-Term Boost in Luxury Homes
As the real estate market looks bad to many Chinese investors, they are becoming more interested in U.S. properties. The trend of Chinese buyers flooding in the U.S. isn’t new, as the nation saw a surge in purchases among Chinese buyers following the anti-government protests that took place in Hong Kong in 2019.
Once travel restrictions are lifted, civil unrest in China could inspire many buyers to seek properties in the U.S. as a potentially safe escape. Many of these investors will likely be wealthy Chinese citizens who have grown weary of other nations’ perception of China as a third-world nation, as Yun stated. Yun explained, “They want to park their money in a first-class world economy, which is Australia, Canada, and most importantly the U.S.”
What’s the Best Step to Take for Investors?
Although the real estate market has taken a hit because of COVID-19, as many homeowners stay in place with uncertainty about the future, many investors are seeing the lack of competition in the real estate market as a chance to lock down amazing deals. The current market is ideal for many buyers who want to take advantage of great prices and low-interest rates.
If you are interested in buying a home in Amelia Island/Fernandina Beach call Summer House Realty today. We accommodate all of our clients with virtual home showings. Our real estate agents are some of the best in the business and will research, show, and help you purchase the home of your dreams. Call Summer House Realty today for all of your real estate needs (904) 557-3020.