The COVID-19 crisis has impacted Americans on so many levels, causing them to change the ways they live, work, and spend. With millions of U.S. adults out of work and widespread financial uncertainty abounding, a lot of people are rethinking financial decisions and taking a more conservative approach to parting with their money -- and that extends to real estate transactions and agreements.
Out of every four Americans who initially planned to buy or rent a home between March and June of 2020, three are not following through with those plans, reports FinanceBuzz in a new survey. Additionally, more than 60% of Americans say that 2021 is the soonest they'd feel comfortable buying a new home or signing a new lease for a rental.
COVID-19 is delaying real estate-related decisions
Among those Americans who are postponing or canceling their plans to move, the most common reason boils down to an inability to view homes in person due to the ongoing pandemic. An estimated 42% of those changing their plans cite this as a deal breaker. And while virtual tours may be a reasonable substitute in shorter-term lease situations, it's highly uncommon -- and imprudent -- to buy a piece of property without actually seeing it in person first.
Furthermore, 25% of those who have changed their plans say they're waiting for the market to improve as a whole before commiting to a lease or home purchase. Though the survey doesn't specify what market they're referring to, it's likely they're talking about the stock and jobs market as opposed to the actual real estate market.
Meanwhile, for 19% of people who canceled plans to sign a new lease or buy a new home, job loss was a driver. And that makes sense -- it's hard to qualify for a mortgage or lease without a proven source of steady income.
Interestingly, 15% of people say they aren't moving forward with plans to buy or rent a new place because their landlords gave them a month-to-month lease extension. And 12% feel it's too hard to get approved for a mortgage given current circumstances. Finally, 11% feel there's less inventory to choose from right now, and so they're holding off on their plans to move.
Home sellers and landlords may need to be patient
Clearly, there's a lot of economic uncertainty right now, so it's no surprise that it's trickling down to the housing market. If you're looking to sell a home, you may need to be prepared to come down on the price if your goal is to draw in buyers at a time like this. A better bet, however, may be to wait until COVID-19 becomes less of a threat and the economy improves before listing your property.
If you're a landlord with vacancies, you may need to sit tight for a while, though that's not your only option. You could attempt to sign some shorter-term leases or offer incentives for prospective tenants looking to rent for a year or longer.
And don't underestimate the effectiveness of a well-put-together video tour of your rental units. While it's doubtful that a serious homebuyer would purchase a property without seeing it in person, renters may be more flexible, especially if your virtual tour comes with extensive details about the rental in question.
Ultimately, things might stay sluggish on the real estate front until it's safe to view homes again in person and the economy itself picks up. That's something home sellers and landlords should brace themselves for.