The global Coronavirus pandemic has affected all industries in one way or another. From large corporations to small businesses, many companies have been forced to furlough workers or temporarily close their doors and watch profits dwindle.
In addition to hospitality and retail, the real estate industry is another market that has taken a hard hit.
At the start of this pandemic, many analysts were concerned the fallout would be just as damaging as the subprime mortgage crisis of 2008. Here are four scenarios currently playing out in the housing market.
Lower Mortgage Rates
The Federal Reserve has cut mortgage interest rates twice, currently down to 3.8 percent. Some lenders are hesitant to drop lower, believing the Federal Reserve will step in again to cut its target rate even further.
Harder to Attain Credit
With lower rates comes more stringent credit applications. To qualify, some banks and lenders now require an applicant to maintain a credit score above 700 and put down no less than 20 percent. Unfortunately, due to loss of income, few buyers are capable of paying right now.
Home Construction Delays
The pandemic has also affected supply markets and materials used for homes, as well as finished products, like appliances. While homebuilder confidence has risen, supply cannot keep up with demand, construction costs have increased and there is a labor shortage. If these supply lines remain hindered, it could reduce home building and lead to inventory shortages.
Forecast for Recovery
While it’s uncertain when or how the market will rebound, technology has been instrumental in keeping real estate above water and is expected to become more prominent in the future. Virtual tours are gaining popularity and real estate website visits have risen steadily.
By Carrier is offering private home showings and design consultations during the pandemic. To learn more, contact us today!