The last few weeks have been some of the most interesting times we have experienced in recent history. First and foremost, stay safe and stay at home. We know what we have to do.
You are probably wondering how the coronavirus situation may impact your purchase, your refinance, or the value of your home generally. I’ve done the research to find answers for you. Here’s what you can expect.
Real Estate Closings Will Continue
Let’s start with the good news. The Governor’s shelter in place order exempts certain businesses as essential services. That means businesses deemed “essential” can stay open (under rules designed to prevent the virus spread) and their employees can still go to work. Real estate has been deemed essential, including title companies that do closings, appraisers, home inspectors, underwriters, attorneys, etc. In short, this means your closing is NOT cancelled or delayed indefinitely. However, each company will have its own policies with regard to whether to stay open or not. Most certainly, there will be less people allowed to attend closings for example. Probably only the buyers themselves and their attorney who needs to explain the documents. We have also seen inspectors not allow buyers into the property during the inspection or limit attendance to one specific buyer for a total of two persons. Be patient as this bears out, but I think I can speak for all of us in real estate when I say our goal is to close your deal.
Watch Out for Small Hurdles With Loans
Let’s discuss loans for moment. When the rate fell over the last few months, in some cases as low as 3%, the lenders got jammed up with too many loans. They did not have enough processors and underwriters to handle them and actually began artificially raising their own interest rates to slow the pace of applications. This was already happening before the virus situation became acute last week. So now you can expect some delays as there are fewer employees available to handle the loans in the pipeline. If you have not refinanced, it may not be a good time to do so no matter what rates you see. Click here for more information about refinancing.
If you have a loan in the pipeline (meaning you locked a good rate and submitted a full application), you will want to see when your lock expires, whether you realistically will close by then. If you don’t think you will close before your rate lock expires, contact your mortgage broker to see if you can extend the lock since rates have risen sharply. Keep in mind purchase loans will be given priority over refinance loans.
How Has The Real Estate Market Reacted?
We have included the market report here for sales through March 14. This was before the situation became more serious, in my mind the 14th or 15th, but it does give us some hint at what is to come. For the most part, it’s plain to see the market is not doing well. It has been widely reported, and you can see it here, that inventory is the lowest in history or at least since they started tracking data 30 years ago. In most areas you see 15-20% drops from this same time last year (which was itself historically low). This is especially true of condos. We saw a bounce in inventory in the previous few months but that seems to have vanished in the crisis.
Market times are way up also and closed sales are way down, both key indicators. The bright spot seems to be decent appreciation in some area due to lack of inventory, and also interest rates remain low.
If you are looking for an affordable updated home (usually something below $500,000 is affordable here), be prepared to see crowds at open houses and be ready to battle in a multiple bid situation.
My Expert Perspective
I have been in the real estate and loan business, almost 20 years now. I have seen the dot.com bubble burst, 9/11, and crash of 2008. My business and the real estate market survived all of that and grew, and it will do the same here. Real estate has always been a solid long term investment but more than that, it’s your home where you build memories. So hang in there!
Please contact me if you want to talk or text about real estate, refinancing or anything else. I have some extra time now like most of you.
Download our latest Market Guides for more in depth details about the real estate market in Chicago’s neighborhoods and suburbs.
Fill out the form below to get your guides