The coronavirus pandemic has left many people pondering what the future holds. To anticipate the implications for property owners and real estate investors, we can look to our prior economic experiences. Here’s what investors in Southwest Michigan should anticipate during the coronavirus pandemic.
Shift in Demand
It is anticipated that the real estate market will see a decline in the number of potential buyers and an increase in the inventory of available homes for sale. As a result, buyers are likely to hold a position of advantage during negotiations. Due to the reduced demand for homes, sellers may have to be more open to adjusting their prices to meet the expectations of buyers. In such a scenario, it is essential for sellers to be flexible in their approach to negotiations and consider setting competitive prices to make their property more attractive to buyers. Conversely, buyers may have a greater range of options to choose from and can negotiate with confidence, taking advantage of the current market conditions to secure a more favorable deal.
Homeowners may be experiencing income losses that impede their ability to pay their mortgage. This situation may result in an increase in distressed properties, allowing real estate investors to obtain properties for less than their market value. Investors will have more bargaining power in traditional real estate purchases. The housing market, in general, will likely experience stagnant price growth, and there will be less demand for new construction homes as existing properties will be readily available.
Real estate investors can take advantage of the increase in distressed home sales, which has resulted from the coronavirus pandemic causing financial hardship for many people, leading them to sell their homes. These individuals may be more willing to accept lower offers, as they may have limited options to resolve their financial difficulties. Nevertheless, it’s essential to approach negotiations with sensitivity, as these sellers may be experiencing heightened emotions during the process.
Real estate investors who own short-term or vacation property rentals should anticipate significantly reduced occupancy rates during the coronavirus pandemic. With safe-at-home orders in effect across the nation, most individuals will not be vacationing or visiting relatives. Furthermore, vacationers may have lost the necessary income to embark on such trips. To attract short-term renters, you may need to lower your rates temporarily. Even if you don’t charge the full rental amount, you can still cover some of your expenses.
Eviction and Foreclosure Suspensions
Given the impact of the coronavirus pandemic, real estate investors operating in Southwest Michigan should be prepared to halt any ongoing evictions or foreclosure actions against their tenants. The implementation of essential-only work orders and safer-at-home directives has led to an unprecedented surge in unemployment, leaving many individuals struggling to make ends meet and pay rent. While these tenants may have faced eviction proceedings under normal circumstances, it’s critical to suspend such actions during the pandemic to provide them with the opportunity to settle their rent arrears. Property owners with outstanding mortgages who are also unemployed may face similar difficulties in meeting their rent obligations. Typically, such situations could trigger foreclosure proceedings, but during the pandemic, it’s essential to delay such measures to enable them to catch up on their payments.d.
Tighter Mortgage Lending
The recent decrease in mortgage rates has resulted in a substantial increase in applications for real estate loans. Due to the surge in demand, mortgage originators must implement stricter criteria to prevent over-lending. Lenders may require a higher credit score or a larger down payment.