By Jon Miller, Realtor®
March 21, 2020
The impact of the Coronavirus is affecting every one of us. These are difficult, and very unusual, times. While many of us are home with our kids due to school closings and work from home situations we’re trying to stay entertained while keeping social distancing in mind.
Closure of Non-Life Sustaining Businesses
On Thursday, Governor Wolf ordered all non-life sustaining businesses to close physical operations. This includes everything from schools to construction services to real estate offices. It’s unprecedented and there are still a lot of questions about what it means and, of course, how long these closures can last.
The Spring Real Estate Market
Under normal circumstances, the real estate market would just be getting into full swing right now. More new listings go on the market in March through May then during any other time of the year. June and July are the two months of the year with the highest numbers of real estate closings. These closings are on homes that went under contract in the preceding 1-2 months, which is right now.
These aren’t normal circumstances. In a typical home sale, a buyer will tour a home in-person with their real estate agent. Once a buyer makes an offer on a home and have a signed purchase agreement with a seller the buyer would perform home inspections. They would also make an application for a loan through a mortgage lender. The mortgage lender will order an appraisal to get an independent assessment of the value of the home to verify that the loan is a good investment on their part. A Title Company would research the ownership of the property to verify that the seller has the legal authority to sell the property. The title search may require physically searching through the city or county public record file. In addition, moving companies and contractors are affected by the closures.
But, under the current statewide closures most of these things can’t happen. Simply seeing a home in-person is difficult and risky. It’s not the time for open houses and there are questions about whether in-person showings can even take place.
Home sales typically take anywhere from 1-2 months between the time a buyer and seller have a contract in place and the closing. This means that if we see a sold price today, that price was actually agreed to some time ago. Because of this, we won’t know the real impact on home values for some time after the closure order is lifted. I’ll do my best to keep you informed as we see things unfold.
Current Homeowners & Refi’s
If you’re a current homeowner with no plans to move anytime soon, it may be a good time to refinance. By refinancing you may be able to save several hundred dollars per month. There’s a lot of news about the Fed reducing interest rates to zero. But, it’s important to know that Fed rates and mortgage rates aren’t tied to each other. Mortgage rates are low, but they are fluctuating day by day and hour by hour. If refinancing may help you should talk with an experienced lender who can guide you through the process and help you assess whether or not it makes sense.
Current Homeowners & Mortgage Forbearance
New information is developing every day. Homeowners who have lost income may be eligible for mortgage forbearance for up to 12 months. This is a new development and you can find more information here.
Buyers and Sellers Under Contract
Update: An announcement was made on March 21 that title companies can now operate. This will make things easier for those who may have a home currently under contract.
Those who are currently under contract to buy or sell a home will have a lot of questions. The standard sales contract in PA has a lot of dates and deadlines that need to be met in order for the transaction to proceed and to avoid risking loss of deposits. I’m recommending that clients under contract consult with an attorney since PA is a non-attorney state and lawyers aren’t involved in most residential real estate transactions. Unless a real estate agent is also an attorney, we’re not trained nor qualified to interpret the law or provide legal advice.
Potential Buyers and Sellers
If you’re considering putting your home on the market now is a good time to work on getting it ready to sell. Take the time now to get your home ready by cleaning and organizing so that when homes can be easily shown again you can have it on the market right away.
If you’re planning on buying a home soon now is a good time to get more information about the home buying process. Talk with an experienced real estate agent to learn what you need to know. Also, talk with an experienced local lender about loan options so you know how much it will cost and what your price range will be when the time comes.
Above all else, stay safe and know that we’ll get through this. Follow the CDC guidelines and keep social distance. Contact your friends and family on the front lines who work in health care and local businesses like grocery stores. Let them know you’re thinking of them and ask if there’s anything you can do to help.