The real estate market in California has slowed in recent weeks, due to the coronavirus and resulting stay-at-home orders. But it’s still possible to buy a home in California in 2020, despite the ongoing public-health situation. You just have to do it a bit differently than in the past.
Buying a Home During Coronavirus: 5 Things to Know
The real estate process in California has changed due to the public-health crisis. But deals are still being done. Homes are being sold and loans are being closed. It just works a little differently.
We’re actually seeing a lot of ingenuity and inventiveness right now, on the part of real estate agents, home appraisers, settlement companies and the like. Everyone is working together to make home sales happen, on behalf of buyers and sellers.
Here are five considerations for those who want to buy a home in California during the 2020 coronavirus pandemic.
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1. Coronavirus has changed the home-buying process.
One of the first things you should know is that the California home-buying process has changed considerably, due to the coronavirus pandemic.
The biggest change is the absence of face-to-face interaction between buyers and sellers, and between buyers and their real estate agents.
For example, many real estate agents in California are now using FaceTime and other video-conferencing tools to show houses. Listing agents are offering comprehensive virtual tours for properties they are trying to sell.
Listing agents are also adjusting their procedures for those times when a buyer actually visits the property in person. They often place hand sanitizer by the front door, and sometimes even shoe coverings. They open all of the doors, closets and storage areas in the house so the buyers don’t have to touch anything during their tours.
The bottom line is that real estate transactions are still being completed across California, but with some modifications.
2. Housing inventory had dropped in recent weeks.
At a time when there are fewer home sales, you might expect inventory to start piling up. Fewer buyers means there are more properties to go around, right?
In reality, we have seen a drop in for-sale inventory over the past few weeks. According to an April 16 news release from the California Association of REALTORS (C.A.R.):
“California’s supply of available housing decreased in March from the prior month as the COVID-19 pandemic continued to disrupt the economy and the housing market.”
This is partly the result of sellers either taking their homes off the market, or deciding not to list them in the first place. They might do this out of fear of contamination, or because they feel like there aren’t enough buyers out there to make it worthwhile.
While the California real estate market has certainly slowed down, there are still buyers out there looking for homes. Over time, some sellers could realize this and enter the market again.
The bottom line: Anyone planning to buy a home in California during the coronavirus pandemic should know there are fewer properties available today. So the home-buying process might take a little longer than it would during more normal times. Patience is key.
3. Real estate and mortgage paperwork can be handled digitally.
Mention the real estate closing process, and many home buyers picture face-to-face meetings conducted in a conference room. But it doesn’t work like that during the coronavirus situation. Closing procedures are typically conducted remotely these days.
Most of the purchase and mortgage-related documents can be handled digitally, through electronic signatures and document submission. The mortgage industry has been moving toward a digital / paperless process for years. The coronavirus pandemic gave those efforts a strong push.
At Bridgepoint Funding, for example, we handle the entire home loan process digitally and remotely, without face-to-face interaction. The same is true for most of the other paperwork relating to the home-buying process in California.
These are unusual times. Fortunately, a lot of businesses have adapted their procedures so that real estate deals can continue.
4. Mortgage rates are hovering near historic lows.
A few weeks ago, mortgage rates sank to their lowest level in recorded history. That gave home buyers in California a chance to lock in with a very low rate, and to keep it for as long as they hold the loan.
Mortgage rates have fluctuated since hitting that all-time low, but they remain very low by historic standards. And they might drop even lower during the spring and summer of 2020.
In their latest long-range forecast, the economic research team at Freddie Mac wrote:
“The Federal Reserve has stepped in to buy mortgage-backed securities. That has helped to stabilize mortgage markets and bring mortgage interest rates lower. Reduced economic growth will keep inflation in check. Long-term interest rates, including mortgage rates, remain lower over the next two years.”
From a borrowing standpoint, now is actually a good time to buy a home in California. If your income is stable — and you’re fairly confident you can keep up with your mortgage payments — there’s nothing stopping you from making a purchase. And you could lock in at a favorable interest rate.
Learn more about current mortgage rate trends in California.
5. Home prices in California could actually weather the storm.
Mention the word “recession,” and a lot of people think of falling home prices. But the one doesn’t always lead to the other.
In fact, home prices in the U.S. have held their ground in four of the last five recessions. The same is true for California. House values have weathered previous economic storms and could do so again.
According to Doug Duncan, chief economist from Fannie Mae:
“Were we to have a recession, I’d argue housing would provide a cushion because the shortage of supply at the entry-level suggests builders could actually continue to build.”
This is an important consideration for anyone planning to buy a home in California during the 2020 coronavirus pandemic. The truth is we don’t know what will happen with home prices over the coming months. But whatever changes do occur will probably be temporary in nature.
Have Questions About the Mortgage Process?
Bridgepoint Funding has been meeting the mortgage needs of home buyers in California for nearly 20 years. As a broker-based company, we can give you access to a broad range of mortgage products and programs.
We’re also happy to answer any mortgage-related questions you might have, as you consider a home purchase. We look forward to hearing from you!