"Should I Buy a House During the Coronavirus Crisis?"
That's the most common question from today's buyers. To answer this question, I will need to consider:
How long do I plan to stay in this home?
|The graph shows that the median home tenure in the U.S. is now 9-10 years. If you plan to sell/flip in 1-2 years, the answer is probably "not a good time, too much risk". But if you plan to stay longer than 4 years, the market has time to correct from a recession and the answer is "yes".
Will a COVID recession precipitate a crash in the housing market?
|It's possible, but not likely. A crash is the result of sudden oversupply. As the graph shows, in 3 of the last 5 recessions, housing prices actually went up.
Will mortgage rates keep falling?
|Again, not likely. We are experiencing very low interest rates, driven by the 10-year T-bill rate. Given the volatility in the stock market, there has been more demand for Treasury bonds, and yields have gone down, taking mortgage rates down as well.
Will I be able to afford a home?
|If you feel secure about your job, home affordability is at a very high point (defined as percentage of income spent on housing). Remember you've got to live somewhere and paying rent only pays the landlord's mortgage.
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