Why You Should (and Shouldn’t) Sell Your Home in 2020

As a result of stay-at-home orders and rising economic uncertainty, this spring has seen a rapid drop in homebuyer activity. As April comes to a close, many homeowners who have delayed putting their house on the market in what is traditionally prime homebuying season are wondering what their next step should be.

Home sellers have a few choices: They can put their house on the market amid the pandemic, wait until stay-at-home orders are lifted or put off their plans indefinitely. The decision you make as a homeowner must be based on the unique details of your current situation.

Here are three reasons you should sell your home in 2020, along with three reasons you may benefit from waiting:

Sell in 2020: Interest rates are expected to remain low.

Sell in 2020: You have a starter home.

Sell in 2020: You can’t afford your home anymore.

Wait to sell: You just refinanced.

Wait to sell: You’re worried about job stability.

Wait to sell: You’re not willing to compromise on price.

[Read: The Guide to Making a Contingent Offer on a House]

Sell in 2020: Interest Rates Are Expected to Remain Low

Even before the first known coronavirus cases in the U.S., economists and real estate professionals predicted mortgage interest rates would remain, on average, below 4% for the majority of 2020.

The average mortgage rate hit a 50-year low on March 5, when the average mortgage rate for a 30-year, fixed-rate mortgage was 3.29%, according to Freddie Mac. Such low rates initially led to an overwhelming amount of interest from homeowners and buyers, with many lenders lacking the resources to process so many loan applications. Most appear to have since stabilized their operations to handle the volume.

“Lenders are lending money, and they will do so if you want to refinance and if you’re looking to purchase,” says Patrick Boyaggi, co-founder and CEO of Own Up, a mortgage technology company and marketplace based in Boston. “Rates are near historic lows, and lenders now have the ability to underwrite and process loans in a timely fashion.”

On April 23, Freddie Mac reported the average mortgage rate was 3.33%. Even if a rapid economic recovery took place after stay-at-home orders are lifted for most Americans, the expectation is that interest rates will remain low. That’s good news if you’re looking to finance a home purchase or need interested buyers to be able to secure an affordable mortgage.

Sell in 2020: You Have a Starter Home

Especially if you live in a city where home prices were climbing fast and bidding wars were common in recent years, homes at entry-level prices — often purchased by first-time homebuyers — are likely to still see buyer activity through the rest of the year.

“It’s the upper end of the market that might be harder hit,” says Ron Abta, Realtor and founder of Polaris Realty in San Francisco. He notes that even with stay-at-home orders, entry-level homes in San Francisco are seeing more activity than the higher end of the market.

The price range that’s considered entry level depends on where you live — typically it’s considered the lower third of home sale prices for an area.

Even if you’re trying to sell an entry level home, you may see fewer active buyers than you would normally. Boyaggi says many lenders are tightening their underwriting standards a bit due to the economic uncertainty. People with lower credit scores or smaller savings for a down payment may find it harder to be approved for a mortgage.

[Read: How to Tactfully Back Out of a Real Estate Deal.]

Sell in 2020: You Need to Move

If you need to move regardless of stay-at-home orders, it’s still possible to sell your home and find a new one. You certainly wouldn’t be the only one moving for a variety of reasons, explains Barbara Fox, licensed real estate broker and president of Fox Residential Group, a boutique real estate firm in New York City. For example, “there are always people who need to move before their kids start school,” she says.

If you’re able to wait a bit longer, listing your home once the isolation orders lift would be ideal, Fox says. Buyers may not immediately rush back into the market, but as long as the economy sees positive gains, the housing market could see some rebound.

“I would certainly hope that over a period of a few months we see a semblance of normalcy returning and the market picking up to a more normal level,” Fox says.

Of course, the need to move isn’t always positive. If you lost your job, you may be worried about your ability to continue to pay your mortgage.

“There’s this looming potential foreclosure crisis. A lot of people — 26 million — have lost their jobs. How many of those people are going to get their jobs back?” Boyaggi points out.

If you’re worried about continuing to afford your home, selling it may be a valid option. However, the more Americans that attempt such a sale, the more likely that there will be a glut of inventory, which can lead to a drop in home values. At that point, the number of foreclosures will rise throughout the U.S.

Wait to Sell: You Just Refinanced

If you’re one of the many homeowners who have refinanced recently, there’s no reason to consider selling your home in the immediate future. Hopefully, your refinanced mortgage has helped ease financial woes by lowering your monthly payments, which helps to keep you more securely in your home.

Wait to Sell: You’re Worried About Affording Your Next Purchase

Even if you’re not unemployed, you may be furloughed from your job, have taken a pay cut or have been warned about layoffs on the horizon. All of these scenarios cast uncertainty on the future of your income, and in most cases you’ll be better off delaying the sale of your house and purchase of another until you know what the future holds.

“You need to think about all the extreme scenarios and consider all the data, and make a decision from there,” Boyaggi says.

It’s also a good idea to be in contact with your lender if you’re experiencing any reduction or loss of income to discuss options for deferring mortgage payments for a short period of time or modify your loan to ensure you can remain in your home for the long term.

[Read: Everything You Need to Know About a Pending Home Sale]

Wait to Sell: You’re Not Willing to Compromise on Price

If you were looking forward to selling your home in a spring seller’s market, where buyer demand is high and likely to drive prices up, you can throw that dream out the window — at least for now.

It remains unclear what the immediate future holds for individual housing markets when stay-at-home orders end. It’s possible markets will see eager buyers rush onto the market all at once, but the longer quarantines last, the more likely that homebuyers will delay their purchase longer.

“We don’t know if the number of buyers that come back to the market will be enough to absorb the supply — that is still an unknown,” Abta says.

If you don’t like the idea of settling for a price slightly lower than you may have gotten in a normal spring season, you’re better off remaining in your home and waiting until there’s data that provides you with new price expectations. If you’re unwilling to waver on a sale price, you may have to wait out the recession that the U.S. economy currently appears to be enduring, and there’s no telling how long it will last — and how it will affect home prices.

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Why You Should (and Shouldn’t) Sell Your Home in 2020 originally appeared on usnews.com

Update 04/28/20: This story was published at an earlier date and has been updated with new information.

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