Milligan Minute: Real Estate During COVID-19: Mortgages, Lending, Buying, & Selling
While economic downturns typically aren’t good news for the real estate market, this is the first in American history to result in more people moving and significantly low mortgage rates. Will rates continue to stay low? Is it a good time to invest? How is the real estate process different during this pandemic?
Ken Moran, Executive Vice President of Cabrillo Mortgage & Owner and President of Golden Coast Funding, and I are here to answer some of the most pressing questions concerning real estate at this time.
Mortgage Rates Trends & Lending During Coronavirus, insight from Ken Moran
What’s happening with mortgage rates right now and how are they expected to trend for the next few months?
Conventional rates are currently available as low as 2.5%. Jumbo 30 year fixed average is around 3.64% and seem to be normalizing. There are also quite a bit of portfolio Jumbo ARM loans available ranging from 2.875% – 3.5%. Rates are expected to stay low over the next several months.
Has the coronavirus pandemic made it more difficult to get a mortgage? If so, what are lenders looking for right now?
Coronavirus has made it more difficult and expensive to get a loan for higher loan to value, cash out transactions, non-owner, and 2nd trust deeds. The appetite for higher risk financing is not as great as it was pre-COVID and you may have to pay a premium for some of these loans, but there is still incredible financing for qualified borrowers with a down payment. Recently, several of the non-traditional types of loans have found their way back, though not at the same rates and loan to values. It really seems like the mortgage market is trying to get back to where it was six months ago and the strong demand from the Real Estate market has really helped.
Buying & Selling During the Pandemic, insight from Garret Milligan
What’s going on with the real estate market in general? Is now a good time to try to buy or sell in general?
The real estate market is busy as a result of pent up demand, low inventory, and low interest rates. Below are some stats for San Diego County for last month that show prices are up, inventory is down and sales are up (InfoSparks Market Stats):
-Average sales price: +4.7%
-Average price per sq. ft.: +4.0%
-Active listings: -38.5%
-New listings: -13.6%
-Pending sales: +20.4%
Now is a good time to be a seller because of the low inventory. We’re seeing multiple offers on properties and sale prices over asking. There are opportunities out there for buyers but there is a lot of competition.
What can buyers/sellers expect to be different about the process now? How have showings been affected? Is there a difference in the way closings are handled?
Right now, most parts of a transaction are done virtually. Buyers are looking at homes via virtual tours or livestreams first, before meeting with their agents for an in-person showing. In-person showings are limited to two people of the same household plus an agent while maintaining social distancing and individuals must sign Property Entry Advisory and Declaration forms, wear masks, use hand sanitizer and not touch anything in the home. Sellers should expect buyers that are out are serious and ready to make an offer. Transactions are handled fairly the same with documents being signed via e-signatures.
Transactions are happening and deals are getting done. They may take a little longer than normal, but the real estate market is busy.
A huge thank you to Ken Moran for providing this valuable insight. If you’re interested in a more detailed look at how the market has been performing in your neighborhood, feel free to reach out. We are happy to provide additional details into the current real estate landscape as it relates to your needs.
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