You’ve heard reports of people panic buying toilet paper, but you may not have heard about people panic buying houses. While it’s easy to understand why someone would hoard toilet paper, it’s difficult to understand why someone would rush to take out a loan to buy property when they already have a place to live.
The short answer is that during lockdowns, quarantines, and stay-at-home orders, many people realized they don’t enjoy spending long periods of time stuck in their home. Those people quickly sold their homes and other people—including investors—are buying up everything they can find.
Why are people ‘panic buying’ homes?
There are several reasons people are panic buying homes right now. The main reason is that interest rates are low and anyone buying a home will save a lot of money in the long run.
For investors, buying up homes now means less money out of pocket each month and turning a profit faster when the rental market stabilizes. Buying homes now is a long-term investment strategy. For instance, many property investors in Houston are getting ultra-low interest rates and finally have a portfolio that requires a property management company to manage.
While some homeowners began renovating their homes (some out of boredom or to keep busy), many chose to leave and start over with a brand new home. Some people moved out of state, while others opted to buy a new home in the same area.
Individuals want to escape boring homes and apartment living
For many, staying put to ride out the pandemic isn’t an option. Individuals recognize the rare opportunity to get a home loan at a low rate and for those who are already unhappy with their current home, it’s a done deal.
Many people, who now work from home, feel cramped in a small apartment without an office. Parents are finding it next to impossible to set up a proper space for their kids to do remote learning. Many renters can’t stand the thought of being cooped up in their apartment during another lockdown without being able to step outside for fresh air.
How panic buyers are keeping the real estate market alive
It seems odd that the real estate market would be thriving in any area during a pandemic-induced recession, but the demand for homes has skyrocketed all over the United States. Although it seems a little strange at first, people ‘panic buying’ houses in areas like San Francisco and Houston are keeping the real estate market afloat where it would otherwise be suffering.
Although the pandemic officially began sometime back in February, real estate markets didn’t pick up until recently. According to Houstonian Magazine, June 2020 saw over 1,200 more home sales in Houston than in June 2019. Why June? That’s when many Houston residents officially got cabin fever and couldn’t wait to get out of their homes.
When you’re home all day, it doesn’t take long to realize everything you don’t like about your home. People are starting to wonder how many more lockdowns we’ll have to endure and spending even one more lockdown in their current home is too much.
First-time home buyers are looking for properties
Now that we’re dealing with a new wave of the virus, it’s not just homeowners looking to move and start fresh. Renters also want to move out of the big cities and are buying homes in less populated areas. However, homes for sale are in short supply. Some realtors have reported long lines just to get into open houses.
The fact that many buyers are first-time home buyers only contributes to the short supply of homes since they don’t have a home to put on the market when they move.
Low home prices are relative to the individual
People who feel compelled to move away from expensive areas like New York, San Francisco, and Seattle are jumping on low home prices in other major cities. However, low home prices are relative. If you talk to the locals in many cities, home prices have been steadily increasing over the years. However, to someone coming from a high-priced city, those climbing prices look like a bargain.
The COVID-19 pandemic is full of surprises for the real estate market
During the first wave of the pandemic, thousands of people made the drastic decision to pack up, sell their home, and flee major cities. Some moved into their vacation homes permanently. Now, we’re seeing renters searching for homes that provide enough space for them to work from home and keep their kids on track with distance learning.
Nobody would have expected that a pandemic would support the real estate market during a recession. However, as we’ve all learned, the pandemic has been full of surprises and it’s been hard to predict how it will affect every market. The job market may not be stable, but for now, the real estate market looks promising for homebuyers with independent sources of income.