Homes look their best with natural sunlight, which is why homeselling and homebuying coincides with the arrival of summer season in Cambodia. However, the best time to show properties are alongside the less reassuring market due to the global spread of Covid-19. Also known as Novel Coronavirus, the Covid-19 outbreak was recently declared as pandemic by the World Health Organization.
Because seasons are very predictable, the market can easily adapt and prepare for the next season coming. With economic crisis breaking the cycle, the market becomes unpredictable and unstable. If your property is on the market, all the uncertainty might be worrying you about the status of the real estate market.
During a financial crisis, there is a lot of information suggesting that the market is in a very poor position. This results to people getting scared, deciding out of fear, and pulling out their properties off the market. People tend to feel like it’s the end of the world and these people are the exact ones running the world. So the act of pulling out your property, along with thousands of others doing it at the same time, is actually causing the market to crash.
When everybody else is freaking out and pulling out their properties, you must first ask yourself a few questions. What’s the right thing for you to be doing? Should you move forward on listing property during the crisis?
It may not be a good time to list properties but it offers good opportunities that can still prove profitability.
When the economy is struggling, mortgage rates typically fall which is evident today. Mortgage rates have dropped and they seem poised to drop even lower the next few months. It was a similar dilemma during the subprime mortgage crisis where home ownership became more affordable to almost anyone, even to those who couldn’t afford it.
Low Mortgage Rates
Low mortgage rates are creating a great opportunity for home buyers who want to capitalize. That being the situation, there will be a lot of potential and interested buyers in the market. The gap now lies as to who are the ones going to offer them.
This is where you should start thinking counterintuitively. When everyone is buying, you have to be selling. And if everyone is selling, you got to be buying. The challenge in the market today has been a lack of supply. The housing market supply is at near record lows and demand is near an all-time high.
Large Number of Qualified Buyers
The problem is not that buyers are having trouble affording homes, it is that they can’t find homes to buy. This provides a really great opportunity to list your property—not to mention that a lot of your competitors might also be backing out. Listing your property in the market will continuously produce a monthly cash flow for you, especially if home prices are not affected.
Based on the study conducted by Zillow, the home prices during the past pandemics have either stayed the same or just slightly decreased. This combination means competitive house prices as many potential buyers are bidding on a limited supply of homes for sale. It has also found out that the economic situation of a country before the pandemic may indicate the number of buyers even during the crisis.
Before Covid-19, the economy of Cambodia was performing relatively well. There was a low unemployment rate and steady wage growth. Coupled with historically rock bottom mortgage rates, buyers in this crisis period still have a high purchasing power.
The housing market isn’t typically tied to uncertainties because people don’t buy homes purely as an investment. It is a basic need. Even in full-blown recessions, the housing market remains durable. ATTOM Data Solutions conducted a study in previous recessions. It found that home rents are less impacted by a recession.
True enough that it may squeeze people’s income but they will still be needing a home to live. The necessity of homes—and particularly home prices— is going to drive the housing market, according to ATTOM’s Daren Blomquist. If your investment had not been in the real estate market, say stock market, it would have gone down along with the crash.
Real estate industry is not an exception to the great effect of Covid-19. The implementation of social distancing and lockdown puts a halt on open houses, public auctions, and other in person transactions. The good thing is that technology, along with real estate information websites, enable more parts of the transaction to take place online or virtually.
Why Move Forward with Your Listing?
No one knows what the global economy will be like in the next three, six, or even 12 months from now. But it can possibly hit the market drastically, which is still not the case right now. Holding off on listing your property is running the risk of doing so at the time when the housing market is less optimal. You’re less likely to get the return you want and may find a very difficult time to find buyers.
This global crisis will certainly end. Most experts predict that market conditions will return to pre-COVID-19 activities once concerns over the virus have passed. So moving forward with listing your property today, aside from having it purchased quickly through a great number of potential buyers, it would still be able to give you a reasonable return.