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COVID-19: What does it mean for selling your home now, and buying in the future?
Over the past few months, we have all been a little uneasy with the US Government printing trillions of Dollars of cash and people selling their homes across the country at a startling rate. While you may have hunkered down at home, stocking up on food and preparing for the worst, the worst may be yet to come for Real Estate! The bad news is that home prices are probably going to drop significantly, due to the increase in foreclosures and landlords and Airbnb owners having to sell their houses as they no longer can afford to pay their mortgage. The good news: prices are going to drop significantly. One of the oldest investment adages says “Buy at the bottom and sell at the top” and if anyone has bought anytime before Corona then they definitely bought below the top. With over 36 million Americans missing their mortgage payments in April we are expecting to see a heavy sell off, meaning it would be smart to sell for cash now before that rush starts. Why is prices dropping good news? Because you’re selling for cash now! You’re cashing out on your equity now while others may lose theirs. And with some of the lowest interest rates ever, that means you can buy at the bottom and ride the wave back up. After the big crash, when house prices hit the bottom, you can buy again and make money on your property again, just like if you sell for cash now! A research paper published by the University of Granada and Federal Reserve Bank of Chicago read: “During the late 1990s and up to 2007 several countries experienced sharp increases in house prices. These episodes are usually mentioned among the causes of the recent world’s economic and financial turmoil. The dramatic growth in bank lending during this period has been broadly held responsible for these market dynamics.” The housing market tends to see an extended surge after a financial crash for two main reasons. One, interest rates remain low for a relatively long period of time. It alleviates pressure from potential buyers in a cheap market. Second, various forms of stimulus and government support are rolled out to lead economic recovery. Such efforts typically lead to increased appetite for real estate purchases over time. Over the next six months, the Federal Reserve does not intend to hold back in stimulating the economy.
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