First of all, I hope everyone is healthy and taking precautions to remain so, like social distancing, exercising and eating healthy. I have been speaking with many clients – buyers and sellers – and the number one question I get is whether they should consider buying or selling real estate right now, during a pandemic.
First off, although I am highly experienced in real estate – both in years and due to my legal background – this is a situation that is new and has nothing for me (or anyone else) to draw on. However, I feel very strongly that the real estate market here in San Diego is never a bad investment. While I cannot make the decision for any of my clients, I can offer the following to consider:
1. Nature of the market: this is San Diego, Baby!. As I always say, it is important to look not only to the market in general, but to your specific local market. For example, here in San Diego County we are a vacation destination, a coastal paradise. Even if the market goes down, and of course markets always fluctuate as is their nature, it will be the first to bounce back after a recession. This has been proven time and again with other negative situations, like the 2008 housing crisis and the 9/11 terrorist attacks.
Of course, if you are a flipper or plan to hold onto a property for only a short period of time, this may not be the ideal time to buy because of course there is a lot of uncertainty with the economy. But if you are buying to hold the property for some time you have to consider markets are always a risk, but real estate has always been the most profitable ROI of any market, especially in areas like San Diego County.
2. Competition is low. While inventory is very low right now due to the virus scare, this also brings less competition for buyers. Over the last year or so we have seen low inventory, BUT there has been a steady flow of buyers in the market, and we have seen properties with low market time, many with multiple offers, selling quickly as the competition is fierce when there is not a lot to purchase. As many of these buyers may be facing unemployment and fear of investing in anything right now, if you are able to do so you will undoubtedly have less competition, which may enable you to negotiate on price.
The same applies to sellers – lack of competition makes it easier to sell to those who need to purchase homes, and negotiations may be in their favor as well.
3. Low interest rates. The government is keeping interest rates exceptionally low right now to stimulate the market. While many may not qualify for loans due to unemployment, if you do qualify you can get into a loan for a low rate. I definitely advise speaking with a mortgage professional – I have a fabulous one if you need a referral.
The bottom line is that making a major decision like purchasing real estate is always a big deal, and there are always risks. All markets are risky, but real estate tends to fare better than the stock market over time, with higher ROI due to appreciation – ESPECIALLY in areas like San Diego County.
If you are on the fence about whether to purchase or sell a home, speak to an experienced real estate professional (and an experienced mortgage professional if you are considering a purchase). Evaluate your specific situation, look at inventory and comparable sales, and be informed and prepared. Know also that there is a new form from the California Association of Realtors that provides contingencies for the COVID19 situation, where a buyer cannot close a property on time or is affected by the virus financially. Make sure to review this form with your agent. I will blog about it soon.