I hope this blog finds you healthy, happy and safe during these unusual times we find ourselves in. I wanted to send out a quick market update to let you know what I am seeing in our local real estate markets over the last couple of weeks.finds you healthy, happy and safe during these unusual times we find ourselves in. I wanted to send out a quick market update to let you know what I am seeing in our local real estate markets over the last couple of weeks with the coronavirus Covid19 .The process of becoming a homeowner goes beyond finding the right home for you and putting in an offer. It’s important to do some groundwork to put yourself in the best position when going to look at potential home options to make the entire home buying process much smoother. We’ve put together a list of 5 things you can do to become a Gilbert homeowner in 2020 for you below.
Probably the most significant day so far was the April 1st Stay at Home order from the Governor’s Office. It was that order that led to the greatest shift in showing activity of active listings and contracts taken. Up until April 1st we had observed a relatively gradual slow down in showings and the number of active listings on our MLS system was climbing at a modest pace. Keep in mind this is after months of low inventory and high demand. Inventory of available homes had been hovering around the 8000 active listings total, it climbed to about 12,000 in early April and today sits at 14,300. A more balanced market is typically about 18,000 active listings given normal demand. Demand has shifted as buyers are not going out in public as much as they would have otherwise, so the market we are at now could be considered balanced due to reduced demand. We did see a number of VRBO or vacation rental homes go to market as they could not be rented out for the short term. Owners of these properties that were thinking about selling this summer, went to market quickly.
So the good news is that homes are still selling. We have listings that have come to market in the last 30 days, some as recently as 5 days ago and all are receiving showings, some have taken contracts. A new listing in Gilbert priced at $299,000 that went to market on April 10th had 11 showings on the Saturday before Easter. Buyers are still out there and still shopping, there just aren’t as many of them active right now and they are not looking at as many homes as they typically would.
Where this goes from here is of course still hard to say. My feelings have always been that the disruption in our market was related to a health and public safety issue and not a housing issue. The sooner the health concern is removed the sooner the markets will stabilize and possible swing back to the sellers. If the stay at home order were to go on for months, and unemployment continued without resolution then all bets are off on what our markets would look like in the fall. The biggest concern is unemployed homeowners walking away from mortgages or short selling homes, an exodus like we saw in 2007 would be devastating. But I don’t believe at this time that will be the case for a couple of reasons. First, this does not seem like it is going to be an event that lasts for months on end. The news cycle is slowing trending more positively (as of the time of this writing, but things change frequently) and if the trend continues we can expect to see some loosening of social distancing guidelines and see a path to a more recognizable economy. Here’s hoping! Second, the action of the federal government seems to be helping stem the financial impact on some individuals and businesses. That, combined with leniency from mortgage lenders and landlord,potentially looks like it will help the situation and lead to recovery sooner than later.
As for us, it’s not business as usual by any means, but we are staying active and enjoying working with both buyers and sellers under different protocols. We wear gloves and masks on showings, we travel in separate cars. We post more video content and we do more online promotion of listings. Above all we’re confident we will come through this disruption smarter and better than before.
From our family to yours we wish you health, safety and security during these trying times and as always, we are here if you have questions or need anything at all. – Mark Newman – Broker-Owner Realtor
5 Things You Can Do To Become a Gilbert Homeowner in 2020
CREATE A BUDGET
The first step is to create a monthly budget that will account for all of your income, expenses, and debts. Once you have your budget put together, it will help you understand where you stand financially and inform the rest of the home buying process. An important part to take away from this budget is to get a good idea of what you can afford to spend on a down payment.
BUILD UP YOUR CREDIT
One of the biggest things that will affect your financial situation and interest rate when dealing with your chosen mortgage lender is your credit score, or FICO score. The credit score will have an impact on the interest rate offered to you from a lender. In order to qualify for most conventional mortgages, you will need a minimum credit score of 620. If your credit score is above 740 you then fall into the category of having very good credit.
The best thing you can do to improve your credit is pretty simple: live within your means. Make sure you’re making all monthly payments on any open accounts on time while hopefully also putting a dent in any outstanding debt. Getting your credit under control is one of the top things you can do toward becoming a homeowner in 2020.
FIND WAYS TO SAVE
The biggest expense you have when becoming a homeowner in 2020 is your initial down payment. Ultimately, your goal is to put down a down payment of at least 20% of the total cost of the home you’re buying in order to avoid paying Private Mortgage Insurance, or PMI.
If you’re unable to put down the full 20%, you will have an additional monthly expense added to your mortgage to cover the cost of the PMI for the mortgage lender.
LOOK INTO AVAILABLE MORTGAGE RATES AND PROGRAMS
There are different types of mortgages available to home buyers and you should look into each of them to see if you qualify.
Some of these programs come with restrictions on your credit score, the home value, or even if you’re a first-time homeowner in 2020. Some of the programs you may qualify for include VA loans for military veterans, USDA loans for those with lower credit and no down payment, and FHA loans for first-time homebuyers.
With your mortgage, you will also need to choose if you feel you’re better off with a 15-year mortgage or a 30-year. With a 15-year mortgage, your interest rates will be lower but your monthly payments will be higher due to the increased amount paid toward the principal. It is generally considered a good idea to go with a 30-year mortgage to give yourself more room to make additional payments on the principal of the loan on your own terms, but if you feel you can swing the payments on a 15-year, go for it!
GET PRE-APPROVED WITH A LENDER
Finally, it’s time to contact your mortgage lender of choice and go through the pre-approval process. The reason to do this is it will give you a concrete picture of what you can expect to be paying for your mortgage from that lender. You will receive a pre-approval letter that can be helpful during the bidding and negotiation process. We partner with some excellent lenders & mortgage brokers and can help you every step of the way.
Showings: While we are still available to show properties in person, with some restrictions, in order to facilitate social distancing, I am offering showings virtually via video platforms. We utilize drone video tours. You can watch from anywhere!
Offers: Offers can be presented virtually and can be signed using our electronic signature software. You can stay in the comfort and safety of your home to submit an offer.
Buyer and Seller Meetings: I am still meeting client’s face-to-face and am available to you. However, to support social distancing, I am conducting regular Buyer and Seller Consultations virtually using video conferencing.