Do you feel like everyone around you is moving? It’s probably because they are.
An estimated 811,000 new homes were sold in 2020, 18.8 percent above the 2019 figure of 683,000.1 But is making a move right for you? COVID-19 has impacted almost every aspect of life. With interest rates at an extreme low and a significant rise in remote work, many Americans are evaluating their living arrangements. With all the discomfort brought on by the pandemic, many people are looking for space, affordability, being closer to extended family and the quality of life that comes with easy access to nature.
RISE IN REMOTE WORK
A recent study showed approximately 42 percent of Americans are now working remotely full time.2 Around the same time, a report showed that 51 percent of property searches from city dwellers were for homes in the suburbs.3 Without the same tie to a physical office location, many people are looking to trade in the price tag and small space that come with urban living.
COST OF BUYING AND INTEREST RATES
Adding to this, low interest rates have increased affordability for buyers who may have been on the fence about renting versus owning.4Mortgage interest rates have hit record lows5 piquing the interest of first time buyers as well as homeowners looking to change things up.
The numbers show an increased interest in rural and suburban areas which is also driving prices up.6 Although interest rates are low, the cost of buying in some areas has gone up. So, in some areas where demand is high and supply is limited, you could be purchasing a home for a much higher price than it would have sold before the pandemic. As of fall 2020, home prices were up 11.3% year-over-year in rural areas and 9.2% in the suburbs. In urban areas, prices were only up 6.7%.7
BENEFITS OF HOME OWNERSHIP
Home ownership is not just about social status; you can build home equity and wealth, including tax deductions, improved credit history through mortgage, ability to borrow against your home and a forced saving that builds your retirement nest egg. Not to mention, mortgages are the cheapest loans available. And once that is paid off, no more monthly payments. And have you heard of inflation hedge? The fact that houses become worth more as dollar loses value?
Home ownership is also about your space, your rules. You have the ability to remodel, expand, or make your space pet friendly. An owned space is better for children as well with less landlord inflicted restrictions. Afterall, it is the great American dream.
TO BUY OR NOT TO BUY
If you are considering buying a home in the midst of the pandemic, here are some things to consider:
- Your work situation – If your work is going to be remote for the foreseeable future, you might decide to move further away to find more affordable options. If your employer will require you to be back onsite full time as soon as possible, you will want to keep that potential commute in mind.
- Your personal finances – Although owning a home is a great investment, keep in mind there are extra costs like property taxes, utilities and maintenance. Depending on where you move, you may be more reliant on a car rather than frequent public transportation available in urban areas. Keep these factors in mind when looking at your budget.
- Your options – While many urban apartment dwellers are opting to buy houses in the suburbs, there are other options. You might consider moving further from the city center into a townhouse, lane way house or larger apartment, adding 15-30 minutes on to a potential commute rather than hours. This could give you more space and flexibility if your situation changes.
There is a lot to consider before purchasing a home — especially in the midst of a global health crisis. It’s important to keep your personal circumstances in mind, weigh your options and make an educated decision that is in your best interest.
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2021-116154 Exp. 2/2023