Is now a good time to buy a home? It might be — but not for the reasons you would think.
When the novel coronavirus pandemic subsides, home prices could be higher, and financing could be harder to come by, so buyers should try to find deals now, said Barbara Corcoran, Shark Tank judge and founder of the Corcoran Group, a New York-based residential brokerage.
“If you’re smart enough to attack the market as an educated consumer, and get out there, and make a bid on a sweetheart deal, you’re gonna be the smartest guy. And everybody’s going to applaud you six months from now,” Corcoran said on YFi PM Wednesday.
The market could soon favor sellers even more than it did previously, since sellers have pulled their homes off the market, limiting inventory and driving up prices. On top of that, buyers will have more competition once consumers start buying again.
“The reality is [that] when they [buyers] come to the market, everyone’s going to be in the market at the same time, they’re gonna pay more for the home then than they’re going to pay now,” said Corcoran.
Plus, banks are tightening lending standards which could make home buying harder when activity resumes. JPMorgan Chase, the country's largest lender by assets, announced April 11 that it has raised home loan borrowing standards. Borrowers now need a 700 credit rating and a down payment equal to 20% of the home’s value.
“Low mortgage rates are great if you can get them. Lenders are tightening requirements. It’s going to take some time for banks to get comfortable lending again,” said Danielle Hale, chief economist at Realtor.com, on The First Trade on Thursday.
Standards could get even tighter, said Corcoran.
“Once the market resumes, a lot of people are going to be knocked out of the lending environment, [and] not be able to get the financing for the homes…,” said Corcoran. “And in making the requirements more stringent, it’s not good for the consumer. It’s especially hurtful to the first-time homebuyer.”
While the current lockdown is making buying real estate difficult, buyers should still keep an eye on their local market so they can recognize a good deal when they see it, Corcoran said. To identify good deals, buyers should learn about their local market, monitor sales data and shop online.
“Because then they’re [the educated buyer] in the position to actually recognize a sweetheart deal when they see it. And if they pounce on it, they’re going to get the deal of a lifetime,” said Corcoran. “Every real estate cycle that has gone up and down, the deals weren’t made in the down cycles, nor in the up cycles. They were always made in the times where there’s the greatest uncertainty where everybody’s guessing.”
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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