Covid-19 Impact on Real Estate Market
Despite the huge impact that COVID-19 has had on the economy and the health of many individuals, the housing market has remained strong and has, in some ways, surpassed the pre-pandemic market.
However, due to COVID-19 restrictions and concerns, consumers have been forced to change the way they sell and purchase homes during these unprecedented times.
Initially, COVID-19 led to a decline of sales in the spring, which was most likely caused by so many unknowns about the virus. However, as time progressed and more people ventured outside of their homes, sales increased during the summer.
The dramatic increase in housing sales during the summer can mostly be attributed to the existence of extremely low interest rates. Buyers who chose to take advantage of these lower interest rates will save thousands of dollars in interest over the course of their loans.
But as interest rates decreased and sales increased, the cost of homes increased as a result of high demand and an increased number of buyers.
Furthermore, COVID-19 also has changed the way that real estate closings are completed, compared to pre-pandemic times.
Due to the restrictions in place, most title companies require that only buyers who need to sign loan documents and their attorneys are allowed to attend closings. Before the pandemic, in most instances, the sellers’ attorney, the realtors and sometimes mortgage brokers would attend the closing. In a lot of cases, the buyers’ attorney now will not attend the closing and will, instead, explain the loan documents either over the phone or via video call. Despite this current trend, our firm has continued to attend closings in person in order to provide the best legal services as possible to our clients.
While the pandemic continues, a ray of hope has been revealed with the availability of two new COVID-19 vaccines that are starting to be administered and will likely continue through 2021. This development could be beneficial to the housing market as well as more buyers likely will venture out, return to work, and build the necessary savings to put toward a new home. In addition, interest rates are expected to remain low for some time, which also will attract buyers.
For the foreseeable future, it does not appear that interest rates will increase until the pandemic has become fully under control and industries begin to return to normal.
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