How is COVID-19 impacting the housing market?
April 8, 2020
- What you need to know about the CARES Act and what it does for small businesses
- How COVID-19 is impacting the real estate market in Wisconsin
- Is now a good time to refinance your home? Try this mortgage refinance calculator
Today there is an unprecedented amount of economic uncertainty. No one could have predicted a global pandemic coming along to pour water on the US economy just as it was really starting to heat up.
The coronavirus may have shut down our economy temporarily, but the government is hard at work to make sure we bounce back quickly. From small business loans to direct payments to taxpayers and relief for the hardest hit industries, financial relief has started pouring in from Capitol Hill.
Small business loans and direct payments to individuals
Congress recently passed the CARES Act, which includes a Paycheck Protection Program for small businesses and independent contractors (like Uber drivers and freelancers). The program offers at least 8 weeks of funding for businesses with 500 or fewer employees, and each business is eligible for up to $10 million in aid. Funding comes with the exception that the company must keep its payroll intact, meaning it has to retain its workers and not reduce their salaries through September.
The government is making it clear that it’s willing to help businesses stay afloat, but only those that protect their workers’ Paychecks. And as long as the business uses 75 percent of the loan to cover payroll expenses, it won’t have to repay the loan at all.
In addition to helping taxpayers by making sure their employers don’t go out of business, the government is also issuing direct payments to taxpayers making less than $75,000 a year, and married couples making less than $150,000 a year.
While no one knows quite how much money each business and family will need, the plan to help businesses and taxpayers simultaneously just might help us weather the storm until the virus passes. Plus, our elected leaders have already said they’re willing to pass another stimulus bill if the first one isn’t enough.
Advice for homeowners
One area that’s feeling the economic uncertainty right now is the housing market, where home prices could decrease due to a sudden drop in demand. But although prices may decrease, interest rates are coming down too and that presents an opportunity for homeowners to take advantage of the low interest rate environment.
Experts say it’s generally a good idea to refinance your mortgage if current interest rates are at least 1 percent lower than your mortgage rate. A good place to start is with a mortgage refinance calculator that will help you determine if the potential savings are worth it.
In Wisconsin, early data suggests that COVID-19 is giving sellers cold feet and that could lead to less options for homebuyers. As Spectrum News reported, “a lot of sellers are pausing and not putting their houses on the market so there’s a lack of inventory.” But while some sellers see this as a time to pull back, others see low inventory levels as an opportunity to stand out to potential homebuyers.
Advice for homebuyers
If you’re a homebuyer, consider chatting with a local realtor to understand what they’re seeing on the ground first-hand. Realtors may not be doing many open houses right now, but they’re considered an essential resource and will continue helping buyers even if they have to meet with you virtually.
The good news for buyers is that interest rates are low and some sellers are anxious to sell before the market comes down further. According to Zack Tolmie, a home-lending officer at Citibank, “if interest rates stay at these historic lows or even go lower, people will be pushed off the fence to buy a home.”
The bottom line
The government is doing everything in its power to help our economy bounce back, and it’s up to us to do everything in our power to stop the spread of this virus. Luckily, you can take advantage of low interest rates from the comfort of your home. As a homeowner, consider refinancing to a much lower interest rate. As a homebuyer, consider touring homes virtually to find an eager seller.