The New Orleans market has seen major shakeup this spring due to the worldwide COVID-19 pandemic, but tenacious buyers are still finding great deals in our market, spurred by favorable interest rates and seller trepidation. If you are considering a purchase in 2020 or 2021, keeping the following factors in mind could help you maximize your buying power and prepare you for success:
Timing Your Transaction
Some buyers may be asking themselves whether now is an appropriate time for them to make their purchase, or if they should wait later in the year or even until 2021. While it is critical for every buyer to be comfortable and confident in the timing of their transaction, it is also important to understand the myriad of factors that can impact their purchase. Right now, interest rates remain at historic lows, with well-qualified buyers seeing 30-year rates around 3.4%. We have no way of knowing what will happen to interest rates for home loans as the financial outcomes of the global pandemic make themselves known for the next year. What we do know is that low rates increase a buyer’s power within the market, and higher rates hurt them. If you are a buyer who is planning to finance most of your purchase, it could be very beneficial to take advantage of low rates and market volatility to get your deal done sooner rather than later.
Pent-Up Demand and Market Competition
Right now it is difficult to say when market conditions will return to “normal” in Greater New Orleans post-quarantine. We have seen lower-than-expected numbers of homes being listed for sale, and some first-time home buyers choosing to remain on the sidelines until they feel more comfortable. With this pent-up activity, we could see a more competitive fall 2020 or spring 2021. For buyers who are putting a minimal down payment on their home, or shopping at the top of their budget to get the features they need, it may not be beneficial to participate in a more competitive market. For buyers who are paying cash, or otherwise able to write extremely compelling offers, then waiting for increased inventory might be the best way for them to find what they want from their home.
Being Strategic with Renovation Plans
When buyers cannot find what they want due to limited inventory or a specific punch list of likes, needs, and wants, I often point them to shop under their budget with the intention to renovate. A renovation project (for the buyer with vision) can be a great way to get into a neighborhood they would not be able to afford otherwise. Indeed, even buyers who are buying a “turnkey” property generally have deficiencies discovered during their inspection period that must be remediated post-sale, whether it’s a worn-out roof, foundational work, or sagging pipes.
But given current COVID-19 market conditions, buyers need to be more strategic than ever when planning on those repairs. We all hope that a vaccine for COVID-19 will be found and disseminated quickly, but savvy buyers will plan for a resurgence of some degree of quarantine during next flu season. This might mean that some of your repairs or renovations will need to be fast-tracked for completion before any such measures, or delayed until later. When selecting contractors, you might ask them about their policies and procedures under 2020’s quarantine. Were they open for business, or did they shutter for the duration? What types of projects were deemed “essential?” Prioritize your urgent repairs before flu season, and make decisions now about what can wait.
These market conditions have given everyone a lot to consider, and hopefully this guide has been helpful in identifying some issues buyers have not yet considered. As always, if you have questions about whether right now is the right time to buy or sell your property, we are here to help. Be well!