Buying Real Estate When There's So Much Uncertainty
Uncertainty. There’s so much of it in 2020. What will it take and when will Covid-19 cases subside across the country? Will our children be going back to school and daycare anytime soon? Will we be going back to the office anytime soon? Are we ready to confront racism as a society and how? What will be the outcome of the 2020 election? What will be the long-term economic effects of Covid-19? And that’s just the tip of the iceberg. Each of us has our own personal uncertainties and challenges to go along with the ones I’ve mentioned.
Usually, buying a home is fun. You get to focus on your future and finding a home to make happy memories in. These days given all of the uncertainty, the home buying process can be more stressful. If you’ve been thinking about buying a home but aren’t sure if this is the right time here are some things to consider:
How’s your job security? If you think there’s a chance you’re going to be furloughed or laid-off anytime soon it’s probably a good time to wait and see. The last thing you, your family, your realtor, or your lender want is for you to sign on all of the dotted lines and then find out you’re facing a job loss.
Do you have enough in emergency savings? The midst of a global pandemic with unknown economic consequences is not the time to put all of your savings towards a home purchase. If you’ve been saving but don’t have enough for your down payment, closing costs, and a healthy emergency fund it’s probably a good idea to hold off and make sure your home purchase will leave you on secure financial footing just in case something unexpected happens.
Be prepared for constant re-evaluation of risk. The news and information being shared by governments and public health officials is changing daily. This has the potential to effect your job even if you didn’t expect it last week, your emergency fund should something unexpected happen, or any other parts of your life. When you’re buying a home under normal circumstances it should feel exciting and terrifying at the same time. It’s to be expected there’s always stress and emotions involved with buying a home. Given all that’s currently happening expect those stressors and emotions to take you on a rollercoaster ride of constant revaluation of the risk you’re taking on.
Buying a Home in 2020 might be a good decision but it also might not feel good. If you’re in the fortunate position to have a secure job, plenty of emergency savings, and your personal risk evaluation says it’s a good time to move forward so you can take advantage of historically low interest rates, buying a home might not feel like you were expecting it to. It might bring out some emotions you weren’t expecting (this can also happen in the best of times) or you might spend a lot of time worrying about the worst case scenario, which is unlikely to happen but can still keep you up at night.
Hopefully, I haven’t scared you too much. There are still plenty of people buying and selling homes successfully right now. So I’ll leave you with this story:
I have a buyer client who I met with just a week before DC went under stay-at-home orders. She decided to hold off on her search for health and safety reasons but also uncertainty about her job. Two weeks ago, she decided her job was secure and we got down to looking for a home. We found one but it didn’t work out. Then we found another and wrote a winning offer. That was Monday, but on Thursday there was a ripple of uncertainty at her office because her current government contract would be ending. She did have a moment of panic, and we talked through her options, but she had the right instinct to think through possible scenarios and realized, that her imagined worst case scenario of being out of work for more than a year was unlikely given her skillset, so while she’s nervous about the future she’s decided she would be more upset if she didn’t move forward out of fear of an unknown than moving forward with her purchase.
If you think you could come to the same conclusion, you might want to think about buying real estate right now. Otherwise, the real estate market will still be there when you decide the time is right.
