Would you continue with a house purchase during Covid 19?

[Burlington]

I posted a few weeks ago now with the hope all this would soon blow over. That was before the lockdowns, the travel restrictions & businesses closing down.

Now the economic magnitude of this is starting to become clearer - and I don’t think we’ve even seen the real start of that as social distance measurements will continue to bite and alter people’s finances & behaviours for a while to come.

Depending on what I read, either the picture for housing looks rosy (usually written by estate agents) or on the verge of a massive collapse (most economic forecasts)

We had put an offer in which was accepted shortly before the pandemic came to Europe in a big way. We have no concerns around affordability, but given everything else happening right now it just doesn’t feel like a good time to be buying our first house.

We are very comfortable where we are now so no major rush to move.

At the moment I think we have two options, ask for a significant delay into 2021 and then review again or pull out.

Grateful to hear your opinions on the matter !

[Cru Jones]

Tough call. Who knows where interest rates will go?

Unless there was no overarching need (school district; absolutely in love with the house), I would try to negotiate down the price and otherwise walk away (assuming I could).

[Burlington]

Originally Posted by Cru Jones

Tough call. Who knows where interest rates will go?

Unless there was no overarching need (school district; absolutely in love with the house), I would try to negotiate down the price and otherwise walk away (assuming I could).

I guess interest rates are likely to stay low as a form of economic stimulus but who knows how this may end up 6-12 months from now.

It’s that unknown really which has me feeling quite risk averse on it.

[watchmework]

As long as you can afford it, which you said you could yes I would move forward with it.

[Yk101]

I would proceed as planned. Interest rates may go down a bit, but not by a significant margin. I would not expect them to be negative. like with everything else there are scavengers that would try to step in and take advantage of the condition - just look at what is going on with watches. Different scale but the same principle.
To me, a contract is a contract, and it shouldn't be broken.

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[Superburrito]

I don't see any reason to wait, as long as you have a stable job situation. Hypothetically, if rates did go lower in the future you can refinance.

[srvrf]

We put an offer in on a house for our children to move into at college (and as room for us to visit) and we'll go through with it. We did set aside money for the down payment, furnishing and at least 6 months of payments so even though our normal income will take a big hit, we planned for it. Interest rates were very low so that's nice.

So for the OP, if this was part of the long term plan, I would say continue. Even if we have a rough year, the long term outlook should be good.

[Burlington]

Originally Posted by Yk101

I would proceed as planned. Interest rates may go down a bit, but not by a significant margin. I would not expect them to be negative. like with everything else there are scavengers that would try to step in and take advantage of the condition - just look at what is going on with watches. Different scale but the same principle.
To me, a contract is a contract, and it shouldn't be broken.

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Current Bank of England rate is 0.1%.

Even if prices dip it’s not like we would be planning to sell anytime soon either.

[Burlington]

Originally Posted by srvrf

We put an offer in on a house for our children to move into at college (and as room for us to visit) and we'll go through with it. We did set aside money for the down payment, furnishing and at least 6 months of payments so even though our normal income will take a big hit, we planned for it. Interest rates were very low so that's nice.

So for the OP, if this was part of the long term plan, I would say continue. Even if we have a rough year, the long term outlook should be good.

Yes it is part of the plan - as we have been waiting to buy somewhere for a while now.

[mjr24]

Quite honestly, I think social distancing is coming to an end soon. The numbers do not support the measures being taken...and it's one thing for business owners to have to eat a month or two of income due to places being shut.....but these people aren't going to stand for having to go out of business due to this. There are a lot of business owners in WI who are opening regardless of the stay at home rule and many sheriff/police departments here have made it clear they are NOT going to enforce the order. I'm ready for stuff to get back to normal....

[Papanas]

Originally Posted by mjr24

Quite honestly, I think social distancing is coming to an end soon. The numbers do not support the measures being taken...and it's one thing for business owners to have to eat a month or two of income due to places being shut.....but these people aren't going to stand for having to go out of business due to this. There are a lot of business owners in WI who are opening regardless of the stay at home rule and many sheriff/police departments here have made it clear they are NOT going to enforce the order. I'm ready for stuff to get back to normal....

Yeah , I’m over the scamovid 19 too .

[Old Farmer]

One thing is for certain, today is probably the best time to buy property as it will never be cheaper.

[Brenngun]

Originally Posted by mjr24

Quite honestly, I think social distancing is coming to an end soon. The numbers do not support the measures being taken...and it's one thing for business owners to have to eat a month or two of income due to places being shut.....but these people aren't going to stand for having to go out of business due to this. There are a lot of business owners in WI who are opening regardless of the stay at home rule and many sheriff/police departments here have made it clear they are NOT going to enforce the order. I'm ready for stuff to get back to normal....

Originally Posted by Papanas

Yeah , I’m over the scamovid 19 too .

What does either one of these responses have to do with the OP's question? Just thread lock fodder. Take it elsewhere if you can't add value to the discussion.

To the OP. Since it's part of your long term plans and you obviously liked the property you should go forward with the purchase. It is likely to still be a good long term investment. After all they're not making any more land.

[RJG]

I would wait. The level of job security - spreading to all sectors- is becoming quite low. Is your buget/ finances well off ? Is your revenue stream able to withstand some hardship?

Only you can answer that one, of course.

I know I'd have to wait.

[WatchEater666]

I would not buy property until a major slowdown, which will happen.

[Papanas]

Originally Posted by Brenngun

What does either one of these responses have to do with the OP's question? Just thread lock fodder. Take it elsewhere if you can't add value to the discussion.

To the OP. Since it's part of your long term plans and you obviously liked the property you should go forward with the purchase. It is likely to still be a good long term investment. After all they're not making any more land.

Carry on . Best of luck OP, proceed with caution,

[77T]

For many reasons I would go through with the purchase. If your uncertainty is based on home values dipping, timing the market for real estate is nearly as hard as the stock market.

The other reasons are to use as much OPM as possible at low debt cost, have control over your domicile, build long term security and have pride of place.

Even if home values dip, they will return.


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[Mifune]

hell yes... saw a quote for 2.75% just this morning on the tele. I think I am going to refi.

[Burlington]

Originally Posted by Brenngun

What does either one of these responses have to do with the OP's question? Just thread lock fodder. Take it elsewhere if you can't add value to the discussion.

To the OP. Since it's part of your long term plans and you obviously liked the property you should go forward with the purchase. It is likely to still be a good long term investment. After all they're not making any more land.

Thanks yes - we had a look through again last night and are leaning towards continuing.

Originally Posted by RJG

I would wait. The level of job security - spreading to all sectors- is becoming quite low. Is your buget/ finances well off ? Is your revenue stream able to withstand some hardship?

Only you can answer that one, of course.

I know I'd have to wait.

We are lucky to be quite shuttered from any impacts coming from corona, at least at present.

Originally Posted by WatchEater666

I would not buy property until a major slowdown, which will happen.

I also do think a big slowdown is coming, I guess it’s the uncertainty of that which has just caused pause for thought.

Originally Posted by 77T

For many reasons I would go through with the purchase. If your uncertainty is based on home values dipping, timing the market for real estate is nearly as hard as the stock market.

The other reasons are to use as much OPM as possible at low debt cost, have control over your domicile, build long term security and have pride of place.

Even if home values dip, they will return.


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Thank you, these are all really useful points.

[Burlington]

Originally Posted by Mifune

hell yes... saw a quote for 2.75% just this morning on the tele. I think I am going to refi.

We have a mortgage agreement in place at a touch over 1.85% and fixed for 5 years.

[daveathall]

If I was at the part where all the searches were done and just at the stage of exchanging contracts I would carry on. If you are part of a chain and need to sell your property, I would be tempted to wait. If you choose to carry on may, I wish your house to provide you and your family with love and happiness for many years to come.

[andyxxx]

My business is property. I would not complete the purchase at pre-epedemic price.

I believe there will be a massive drop in property prices due to the biggest impending recession the UK/world has seen.

Even if you intend to live there forever – things change and you could want or need to sell before you intended and I expect the house will now be worth considerably less than before you agreed a price – pre-epidemic.

However, I do agree with much that 77T says, especially that prices will return – but IMO not for several years.
I would certainly still purchase a property rather than renting, but at the new price which the market will set.

[77T]

Originally Posted by Burlington

We have a mortgage agreement in place at a touch over 1.85% and fixed for 5 years.

Do they offer 15 year fixed rates where you are?

Better to get a longer fixed term methinks.


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[mjr24]

Originally Posted by Brenngun

What does either one of these responses have to do with the OP's question? Just thread lock fodder. Take it elsewhere if you can't add value to the discussion.

To the OP. Since it's part of your long term plans and you obviously liked the property you should go forward with the purchase. It is likely to still be a good long term investment. After all they're not making any more land.

Do you lack reading comprehension? The OP stated part of the reason he was worried is because he believes social distancing is going to continue. I am saying it is not. Thanks for playing, though, brenngun!

[Zakalwe]

I'm no property expert but I would not. There are so many variables that are impossible to fully evaluate.

For example, it has been suggested that property prices in expensive commuter towns in the South-East outside London could collapse if the pandemic results in a permanent increase in the number of people working from home: firms may decide that having big, expensive city centre offices is no longer appropriate which would change the way millions of people work, live and commute.

Obviously that may not apply to you at all, but it's just one example of a previously unforeseeable consequence of the infection.

[airchitect]

The only property I’ll consider owning is investment property, specifically multi family. Owning property you can’t make money from is one of the biggest scams perpetuated on us all. Even if you “own” it outright it can still somehow be taken from you if you don’t pay a tax and cost a fortune to maintain..... buy something others will pay you to live in op and house hack if need be.

[GB-man]

Originally Posted by Yk101

I would proceed as planned. Interest rates may go down a bit, but not by a significant margin. I would not expect them to be negative. like with everything else there are scavengers that would try to step in and take advantage of the condition - just look at what is going on with watches. Different scale but the same principle.
To me, a contract is a contract, and it shouldn't be broken.

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Given there has to be a spread for a bank to make money on a mortgage they won’t be dipping towards zero like say the fed funds rate. Historically the spread is around 1.8% but currently in the US it’s closer to 2.5 because banks adjust for risk, liquidity etc.

OP: I would expect a lower price and would consult with your attorney regarding the best course of action. One thing I will say is in this environment I value my home more than any other asset by a long shot. If it’s going to greatly improve your quality of life and you can afford it then maybe there’s a middle ground to close the deal amicably for less.

[beshannon]

Originally Posted by Burlington

Would you continue with a house purchase during Covid 19?

Yes

[denmanproject]

Yes

We are just finishing up the kitchen then will be actively looking to purchase and move within the year

[uscmatt99]

Originally Posted by Burlington

We have a mortgage agreement in place at a touch over 1.85% and fixed for 5 years.

What are the terms of the loan beyond 5 years? I'm not familiar with housing and loans outside of the US. But as an example, we will be refinancing our home at 2.75% fixed with a 15-year term, consolidating two higher rate loans, one of which was variable. We will likely have the new loan paid off well before then, but a shorter term loan here didn't yield a significantly lower rate. This way we have a safety valve in case the recovery phase is protracted for my business.

In general, I feel like it's a good idea to make your first home purchase when rates and costs are low, as they will be in the near term. We built our home in 2009 when materials and labor were cheap, ended up being great timing.