As a real estate consumer, you need to know that the housing market is currently one of the bright spots in the U.S. economy.
Surprised? You’re not alone.
Sure, the processes have changed a bit and some lenders have changed their lending standards, but overall, the real estate market looks very much like the pre-pandemic market.
If you’re considering buying or selling a home in the near future, read on to learn about some of the changes.
The national market, in a nutshell
While March and April home sales plummeted, there are nuggets of wonder in the rest of the statistics.
Want to hear something surprising? Demand for homes is higher now than it was before the lockdown and prices continue to rise.
In fact, homebuyers vastly outnumber sellers in the current market. “More than 41% of homes faced a bidding war in the four weeks ending May 10,” according to Diana Olick at CNBC.com, citing a recent study.
For comparison, only 9% of homes for sale experienced bidding wars in January, pre-U.S. pandemic.
To add to the excitement, “mortgage applications from buyers jump 11%,” according to the folks at CNBC.com.
The authors add that they expect the frenzy to continue as the lockdown is eased. Perhaps then those wanting to sell will jump back into the market. We need homes to sell to these eager buyers.
Speaking of mortgages
With the volume of forbearance request rolling in, mortgage lenders decided enough was enough and began tightening lending standards.
Down payment requirements are higher and some have upped their minimum credit score requirement.
JP Morgan Chase & Co., for instance, announced that it is raising the minimum credit score they will accept to 700 and increased the minimum down payment from 3.5% to 20%.
Since Chase is the nation’s largest lender, others are following suit.
“Wells Fargo and US Bank both adjusted their minimum score requirement to 680 (including for FHA and VA loans, which typically feature credit-score requirements as low as 580),” according Natalie Campisi at Inquisitor.com.
If you are considered a credit risk, the best thing to do is work on your credit score. Check back here in the next week or two when we’ll be showing you some quick ways to raise your score.
Thinking of selling? You need to know about this
If you are thinking of selling, let’s get that home on the market sooner, rather than later, and here’s why:
“Home prices will hold up, at least through the summer, but declines are coming,” Mark Zandi, chief economist at Moody’s Analytics tells Bloomberg.com’s Noah Buhayar, Prashant Gopal, and John Gittelsohn.
If you’re in forbearance, you may also find challenges to getting the home sold if you wait. It turns out that the section of the Fair Credit Reporting Act that was amended by the CARE Act has a glitch.
While the CARE Act requires lenders to report mortgages in forbearance as current, many lenders are labeling these mortgages as being in forbearance when they submit them to the credit reporting agencies.
FHA, Fannie Mae, Freddie Mac and the Department of Veterans Affairs don’t allow those in forbearance to obtain a new loan or even refinance until at least one year after they’re caught up on payments.
If you decide to sell, you’ll be able to take advantage of the sellers’ market that is happening right now.
More questions about buying or selling real estate during the pandemic? Reach out to us – we love to talk about real estate!