The coronavirus pandemic has left the global economy reeling.
As anyone with an interest in investment knows, a weak economy and a turbulent property market go hand in hand. If you were considering making a purchase or sale of property in the lead up to the crisis, you may well be rethinking your approach now.
However, depending on your particular situation, the pandemic might actually have certain advantages.
Read on as we look at all the factors you should consider when deciding whether to buy or sell property in the current climate.
The Situation Before the Virus
Even before the onset of this public health problem, our country's property market was in a difficult spot.
A chronic shortage of supply had driven prices skyward. Many buyers were unable to find anything suitable within their price range.
This was a trend that had persisted across the United States for a number of years. The recovery from the economic crash of 2008 brought with it a demand for housing that outstripped supply.
While this trend had reversed somewhat in Oahu in 2019, prices continued to rise. It was still a difficult time to be a buyer.
As you will see, the coronavirus pandemic has had a dramatic impact on this situation.
The Immediate Effects of the Virus on the Property Market
The virus has had a number of different effects in terms of the property market, both in Oahu and elsewhere.
Firstly, jobs have been lost and wages have been cut. This means that there's less money in our economy to pay high prices for property.
In Oahu, we get a lot of tourism and short-term leasing, especially in the approaching summer months. With the temporary reduction in market traffic here, renting may become more affordable in the short term, especially in tourism hot spots.
This may reduce demand for permanent sales in these areas. If you keep an eye out, you could snag a real bargain from someone who's eager to sell.
The virus and lockdown will also have a disproportionately large effect on our economy. Because we are so reliant on tourism and the service industry, our recession may be more pronounced than those in other areas.
If this isn't something that you're feeling the effects of personally, you will be able to capitalize on the resulting lower prices as a buyer.
Should You Buy or Sell?
If you've had plans to buy or sell a home for a while, you may be unwilling to give up on the idea now.
The good news is that you won't have to. The bad news is that, depending on your circumstances, it may be more difficult.
Aside from the economic implications of the virus and lockdown, there are practical, logistical factors to take into account.
Ordinarily, people go to view a home before they buy it. They may view several homes, or even dozens, before making their choice.
The seller, on the other hand, may have to allow a similar number of viewers before they find a buyer.
With the social distancing requirements currently in place, this is now impossible in many cases. The Hawaii government has issued a stay-at-home order, restricting non-essential travel until further notice.
If and when the government lifts this order, difficulties will remain. Social distancing will remain a necessity until experts find a vaccine.
This is especially true for those working in healthcare, or who have a close relative who is high-risk.
As alluded to above, our economy is much weaker as a result of the virus. This will result in lower demand and falling prices.
While there are many factors to consider, the upshot of this is that the market is now better for buyers, but worse for sellers.
How to Buy a House During the Pandemic
If you've been trying to purchase a new home for months without success, this pandemic might be a blessing in disguise for you. Prices are dropping, and supply is likely to increase as cash-strapped investors look to offload their holdings to get some liquidity.
Of course, you may have been hit by the economic downturn yourself. If you need to buy a home, but your resources are uncertain, you'll need to make every last cent count.
Whatever your situation, the following steps will help you to make the best of it.
Look for Bargains
The pandemic has left many house sellers with far less confidence in the value of their property. If you find the right house at the right time, you could get it for a steal.
Take Advantage of Low-Interest Rates
The Fed recently cut interest rates by half a percentage point in an attempt to limit the negative economic fallout from the coronavirus. This is great news for buyers.
If you're looking to secure financing for a new property, you want interest rates to be as low as possible. If you combine a low house price with a reduced interest rate on the loan you take out, you could get a deal that would have been unimaginable a year ago.
Allow for Extra Room in Your Budget
If you're still pressing ahead with your plans to buy, chances are you're in a reasonably secure financial situation. However, during these times, you never know what tomorrow might bring.
With this in mind, you should leave room in your budget when you prepare to buy your new house. This will give you room to maneuver if you suffer a job loss or pay cut down the line.
How to Sell a House During the Pandemic
As we've outlined, the virus has leveled the playing field somewhat in terms of buyers and sellers. While house prices in our area were steadily climbing, creating a favorable situation for sellers, prices are likely to decline steeply in response to current circumstances.
This means that buyers have more choice, and are therefore less likely to clamor for your property.
However, there are certain measures you can take to try to offload your home a little more quickly.
No matter when you decide to sell your home, curb appeal should be one of your top considerations. In order to sell a property quickly, for a respectable price, you need to make it look attractive to passersby.
Curb appeal refers to the attractiveness of your house from the distance of the nearest public sidewalk. It's about garden maintenance and exterior decor.
You might wonder why this is so important. After all, it's the inside of your property that the new buyer will be living in, right?
Well, yes and no. Because there are fewer buyers around, you'll need to work harder to build demand.
If a casual onlooker (who happens to be in the market for a house) is drawn to your property from the outside, they are more likely to want to have a look inside.
The internet has become increasingly important to the purchase and sale of property over the last number of years. The physical distancing requirements that the virus has imposed have made it even more relevant.
Advertise your property on every online platform you can think of. Share your listing on Facebook and Twitter, and ask all of your friends and family to do the same.
The wider you cast your net, the better your chances of finding a buyer in good time.
Adaptation to Circumstances
Selling has become more difficult because of a shortfall in demand, but also because of practical issues. Fewer people are out physically searching for homes, and in-person viewing has become impossible.
To get around this problem, the best thing to do is use technology. Consider hosting virtual tours of your home for those who may be interested in viewing it.
If you take every possible step to sell your house, but you still can't find a buyer, you'll have to reconsider your asking price. While nobody wants to have to take this step, there may not be any other choice.
Of course, this depends on your level of urgency in relation to making the sale. If you can afford to wait six months or a year to offload your house, you may well secure more money for it.
Getting a Good Deal Despite the Coronavirus
The global virus pandemic has made a lot of things more difficult. The purchase and sale of property are no different.
However, if you do need to buy or sell a home, you will be able to do so. You may need to take a more considered approach, but you will get there eventually!
If you're buying or selling a home and you'd like to learn more about what we can offer you, connect with us today.