The global real estate market although is still strong, despite the situation with COVID-19. It still faces some issues. We offer you pieces of advice on how to buy a home during this period.
What you need to know about buying in a downturn
Nowadays, the situation with COVID-19 has created a lot of obstacles in front of the real estate market. Meanwhile, many world markets faced issues at the beginning of the pandemic, the real estate market still was endurant. In April the median United States prices for a house went up 8% annually to reach about $280,000. Such a change is a good turn for investors. The property market is still the best investment choice in comparison with stocks and bonds, gold, and savings accounts.
Nevertheless, the coronavirus breakout was the reason when many constructions were stopped all over the world. Moreover, the market has faced a deficit in supplies. Thus, the status “as safe as the Bank of England” has to grapple with an uncertain future.
Before you purchase: assess your current financial situation
When you study this question do not concentrate on the situation when prices can go as low as possible. Think about how many properties you can purchase before said prices will rise again. Moreover, the question of paying off the mortgage and surviving the recession is as important as the questions above.
Also, do not forget to check your financial health, mainly because downturns do not influence only owners of homes. Moreover, if you have job instability the purchase of certain also can cause some difficulties. Thus, if you own business, try to be in check of the profitability of it in the current situation on the global market.
Purchasing a home
Purchasing property is considered to be one of the most crucial and cautious financial investments any person may do. While the world is shaken by economic difficulties, this well-known fact is doubted by many. For instance, the global financial crisis in 2008 destabilized the property market. Nowadays, the world faces similar issues, however, according to some experts, the recession this time will not be the same. Statistics show that after various historic financial or economic crises the real estate market mostly stayed undamaged by the harsh conditions.
Despite this situation in the world, you still should not forget about the idea of purchasing a house or any other property as soon as cities and countries start to operate fully. While many countries tried to save their economies through slashing rates, the expenses for borrowing has become much cheaper. This could lead to affordable mortgages for investors with enough finances The situation also relates to refunding of a current property.
Some experienced economists believe that these changes may stimulate more investors to come into the market. This already the case in Australia where pandemic restrictions have been withdrawn.
In the weeks to come, the number of transactions will become bigger while they still are going to be dull in the comparison with ones that were in the of 2019 and at the beginning of 2020. Moreover, there are new listings for sale and more inquiries from possible purchasers on a domain. Meanwhile, many experts are not sure about the nature of COVID-19, they are sure that each local property market of the city will go through it in its way. Thus, at first, look into the situation there and then in the global market.
Buy-to-let real estate
Such property can provide a good basis for passive income through capital growth, rental payments, price appreciation. Moreover, the buy-to-let property offers a different route on the property ladder for an aspiring purchaser who can not purchase in their favorite area.
In the current situation, those quintessential attributes are still working. A slowdown in the economy has complicated the situation with current trends that lead to pricing young investors out of taking part in an inflated real estate market.
Thus provides many possibilities for those investors who still can do their tasks. However, while the world economy faces a crisis, the goes with the renters’ market. Future landlords should be attentive and patient to their tenants who might face issues with paying for renting. Experts state that many opportunities are going to have a straight connection with the location. Thus, the best investment variants will be in the areas where the labor market is preserved the most.
Commercial real estate
Among these properties are bad-hit retail and hotel sectors. Here investors may face potentially the biggest risks. Earlier this year, the market of commercial property has gone down to about 27%, while the prices for hotels and resorts have gone down about 47-40%.
With this crisis, the specialist believes that it will take time to straighten. Moreover, the restoring of previous prices is going to be gradual and take the U-shaped form. Other experts try to keep spirits up by offering an idea that recession will bring opportunities. There are also those people who search for long-term investments in commercial real estate.
Industrial, specialized, residential properties due to strong bases are still fighting against a downturn. According to statistics from China that suffered the first pandemic, health care, and logistics sectors are thriving the most during this period.
However, if we talk about only the real estate market there is still stable value that can bring good income and. The experts address outright purchases and real estate investment trust that can be the best variants in the current downturn. It is best to mix direct real estate and REITs. The last can offer bigger exposure to potential sectors.
All in all, purchasing home during a downturn is not a simple task, thus, always try to keep your head clear and concentrated before conducting any research. And moreover:
- Be endurant
If you wish to find a property with low prices, be ready for the long-term process. There are cases when banks sometimes draw out foreclosure and quick sales that causes displeasure for purchaser and seller.
- Be clever
In case when you have a good sum of money to purchase property, there is a big chance you will receive a bigger rate on the mortgage than before the downturn. Thus, do not opt for the first rate you see.
- Be good
As a rule, downturns make owners of property sell it when it is not the right time. Thus, always try to imagine the thoughts of the opposite side you are going to work with.