How Home-Buying Has Changed Due to COVID-19

Yes, you can still buy and sell a home during a pandemic. Here’s what educators need to keep in mind when entering the housing market now.

Young Woman Wearing a Mask for COVID-19 protection While Disinfecting Her New House

by NEA Member Benefits

Apr 24, 2020


How the housing market is currently being, and will continue to be, affected during the novel coronavirus pandemic depends not only on the overall economy, but also on any temporary distancing and quarantining restrictions at your state or local levels.

States with a lower per-capita rate of infection aren’t seeing as much of an impact on the usual home-buying and selling process, whereas other states with a higher rate of infection have had many common real estate activities curtailed, making the process more challenging.

Despite the challenges, there could be some advantages to taking the plunge now

If you have equity in your home and you have an urgent need to sell, you could potentially minimize your losses by listing soon, says Daniel Anderson, who is both a real estate agent and high-school social studies teacher in Portland, Oregon.

“There’s no guarantee it’s going to be better in six months,” he says. “I’d rather have lost a little bit of profit than lose a ton of profit.”

Many teachers who typically work 10-hour days during spring are finding they have more time available while schools have either gone remote or been canceled, Anderson says: “That may free you up a little bit more to be involved in the process of buying or selling that you wouldn’t ordinarily now.”

On the flip side, there are several good reasons to hold off for a bit

Interest rates are in flux, lenders are nervous, and offers can change overnight. Anderson says waiting a few months might pay off for savvy rate shoppers.

“If you’re a well-qualified buyer, I think lenders and mortgage brokers are really going to work hard to get your business because they’re hungry,” he says, noting that interest rates could dip considerably by summer as a way to encourage home buying and stimulate economic growth.

You also may find good deals if the economy dips further and owners who are facing their own financial challenges list their homes at discounted prices.

Waiting also could give you time to improve your creditworthiness. One emerging option involves “leasing” homes. “I’m seeing some sellers who are willing to do a ‘rent to own’ now,” says Julie Zimmerman, a Realtor and former elementary school teacher in York, Pennsylvania. “That would help buyers to get credit scores up to qualify for a mortgage in the future.”

Additionally, pandemic-related restrictions that have made the buying and selling process more complicated and time-consuming could end up being eased in a few months’ time.

Of course, if you—and everyone else—wait, then you’ll face more competition. “Once this is over, we expect the market to be flooded with buyers,” Zimmerman says.

Before you decide, check your school district’s funding

The economic impact of the novel coronavirus could have an effect on your job security, depending on where you live. Anderson recommends checking your state’s funding formula to assess any potential future financial issues.

“You wouldn’t want to make a purchase today and then all of the sudden be laid off in the fall,” he says. “Look at how things look on the financial side of your district right now. If your state has a tax base that supports schools—like, Oregon is supported largely by property taxes—there’s going to be some hits.”

You’ve decided to move soon. Now what?

If you decide to go ahead and enter the housing market, keep these five factors in mind:

1. Some buyers will face less competition now

Many people are hesitant to buy now, but if you’re ready, you’ll have an advantage. “There are more buyers on the sidelines than there normally are, so I think that’s an important trend, particularly in super-competitive markets,” Anderson says.

He sees the current state of the housing market as a plus for buyers with good credit who are looking at entry-level homes at lower price points. “I think that’s going to present a really unique opportunity for somebody like a teacher who’s maybe kind of on the lower end of the purchasing rung,” he says.

All of the safety hoops that people have to jump through now also can be a turnoff to some buyers. If you’re willing to adhere to the local safety requirements—everything from wearing masks and wiping down surfaces to limiting your in-home tours—then you may have your pick of the listings.

“Anything that reduces the competition is going to help a buyer,” Anderson says.

2. You may not be able to tour homes

Assuming you can tour homes, you’ll need to abide by safe hygiene practices. But in some states, you can’t even get inside the houses you’re considering.

Many tours are being done virtually, and if you’re listing your home, you may be doing that work yourself. “Sellers are taking their own photos and video tours,” says Zimmerman, noting that real estate agents in Pennsylvania aren’t permitted to practice real estate in person.

In her state, Zimmerman says, “people are buying houses sight unseen. They can’t see the house they’re buying until the ban is lifted.”

Zimmerman says that given the unusual circumstances, some new considerations are being added to agreements for these buyers.

“We have an addendum both the buyer and seller have to sign that stipulates that once the buyer can tour the home, they have a few days to do so,” she says. “If they want to move forward, great. If they decide that they don’t want that house, they can cancel the contract with no penalty, and their deposit will be returned in full.”

3. Your loan offer may change quickly

Securing financing can be trickier as interest rates are volatile and lenders make rapid-fire adjustments to what they’re offering. “You have to be sure that your loan is rock-solid right now because the program you’re under might disappear,” Anderson says.

He recommends giving yourself some wiggle room to make sure you can afford the house you really want. “If you’re like, ‘I have to have 3.5% to make this particular purchase,’ you better put a .25% cushion in there,” he says.

Zimmerman says it’s important to keep your credit score up, if possible: “Some types of loans are requiring higher credit scores at this time.”

4. The process likely will take longer than normal

With many people working from home, including title companies and appraisers, the timelines for getting everything wrapped up can be extended. In Oregon, Anderson says a standard 30-day close might stretch to 45 days. In Pennsylvania, Zimmerman says she’s seeing closings occur 45 to 60 days after contract ratification, depending on the loan type.

Some services that might be required for listing, buying and selling may not be available. “Make sure your agent knows exactly what businesses are essential and non-essential right now,” Anderson says. “You’d hate to be in a situation where you’re trying to close a transaction and the contractor you need is now considered non-essential and not allowed to work.”

Zimmerman says that, in her state, many home inspection and moving companies were restricted from working.

Things are changing too quickly for the typical homebuyer to keep up. “The best advice I can give is that they rely on their Realtor as a resource,” Zimmerman says. “Things are literally changing daily. We’re being informed daily, at the least, of changes happening in our state. We’re communicating with lenders and settlement companies … and operating in a way to abide by the order from our governor.”

5. Take precautions to be safe during home tours, closing and more

Many states have either strictly limited house tours or forbidden them altogether. In Oregon, where Anderson works, open houses were canceled, and home tours were capped at only two people at a time. Inside homes, they’re wiping down surfaces and liberally applying hand sanitizer.

Some people are taking extra precautions to minimize exposure for themselves and homeowners. “An appraiser asked me the other day, ‘Would you have the seller please leave all the doors open and all the lights on when I get there?’ They don’t want to touch things,” Anderson says.

It’s important to be respectful of everyone and every place you encounter during the buying process. “Just following the state and federal government guidelines on social distancing is really going to be the biggest challenge,” Anderson says. “I had sellers who had a home inspection, and the buyers invited five of their friends to come in to see the house after the home inspection. My sellers, who were in their 70s, were beside themselves.”

Final note: These changes likely are temporary

Both Anderson and Zimmerman expect that the adjustments—some minor, some extreme—that have been made to stop the spread of the novel coronavirus, which causes COVID-19, should dissipate as the virus abates and life returns to normal.

“I really can’t think of any changes that may stick around,” Zimmerman says.

Anderson concurs, although he notes it’s possible there could be another wave of COVID-19 that would require another temporary return to these restrictions.

“I think buying and selling houses is going to go right back the way it always was,” he says. “I don’t know, maybe in 6, 9, 12 months, there won’t be any social distancing precautions, we won’t be sanitizing our hands and wiping down furniture and boxes, and we won’t be wearing gloves when we go into houses. That’ll be a thing of the past.”

Resources to help you buy and sell your home