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Buying a house in a pandemic can be a good idea

June 11, 2020

Read for 9 min

The opinions of the employees of s You are personal.

Buying a house in a pandemic can be a good ideaBuying a house in a pandemic can be a good idea

They say that good luck will be given to those who dare to go different ways. With the arrival of 2020 and his Covid-19, it is impossible not to see that our lives have changed profoundly and that we do not know how long this change will last or whether we will develop into a kind of new order.

For this reason, the decision to buy a house at this time, be it for investment or for living, deserves all aspects that need to be considered.

Buying a house (at the moment) is not for everyone

After an intensive assessment of your situation, you can find that you can do this without affecting your daily finances, liquidity, and the well-being of yourself and your family. Buying a home is still an excellent medium and long-term investment. Equity markets and entire country economies remain volatile, making real estate relatively safe.

As of March, the value of real estate remained low, with some occasional increases due to random circumstances (some call this price correction as the value of houses in cities like CDMX has risen dizzily since 2013). The Internet buying portals for homes capture the falling price more visually. Several properties have lowered their prices or have “We pay your move” promotions. Some construction companies have been “reinvented” and offer virtual tours and discounts of hundreds of thousands along with other promotions. It is clear that construction companies are among the first to be affected by the pandemic.

All of this is integrated to form a large neon arrow that appears to say “Buy Now”. If you have been waiting for a good opportunity to buy a house (good prices, low interest, promotions), this is the opportunity. I’ll tell you why.

1. The decline in demand for housing will lower prices

Perhaps a confusing sentence: it means that people are looking for less housing to buy for various reasons, and this will cause independent builders and sellers to lower their prices and adjust.

Before the arrival of Covid-19 and “social isolation”, construction flourished in cities, perhaps too much. Only in the CDMX were construction projects on all streets in advance sale. The loans and financing of these structures do not stop, that is, their commitments to the banks (as well as to everyone else) remain, and to cover them, they must sell, generating lower profit margins than expected. This means that we are now likely to find attractive home buying prices.

On the banking side, they least want a portfolio that is insolvent, which makes it possible and likely that they refinance their debt to construction companies. They are expected to give an advantage to almost completed projects that are more likely to be fully completed and sold.

This is good news for you who want to buy a house because you can buy a house that is already finished or nearing completion, which will save you a headache.

An advice: Before buying, no matter how attractive the price, always check the location, access to public services, and other things that you shouldn’t forget.

2. Because historically, living always gains in value

Crises are not new. Thanks to the fact that this is not the case, economists, investors and experts were able to take on the task of examining their behavior, the frequency of their occurrence, their warning signs and the changes they are causing to consumers.

The inverted yield curve that heralds the recession or the fall of currencies in emerging markets is one of these results. In 2019, some experts already announced a recession, the Covid-19 only made it worse.

Economic instability may keep you from buying your own home, but the best antidote to doubt has already been invented and is called “countercyclical politics”.

They were developed to support investors as well as portfolio and financial managers in economic crises in countries. Counter-cyclical measures are used to prevent crises and to know how and when they can be resolved.

That is why economists are not surprised about a change between fat and lean cows. 2020 will be a year of lean cows, but this will cause the country to incentivize those who are willing to spend money (you who want to buy a house) and this will have the support of those you sell who will hurry to come out wrap your best discounts and promotions.

3. Because rates have been lowest in the past four years

Interest rates on loans and, what interests us, mortgages have been falling since March and are now at their lowest level in the past four years. The central bank, ie the bank that lends to all other banks, lowered its intervention interest rate.

“The board of directors of # BancodeMéxico has unanimously decided to lower the one-day interbank rate by 50 basis points to a level of 6%.”

For this reason, your bank can give you a lower interest rate. In addition, the real estate market will be one of the most benefited as banks privilege the loans granted against real security, ie against a good that supports them.

4. Because banks offer conditions that will hardly be repeated

Banks are the first to want to demonstrate their solidity and solvency. But a bulky, criminal portfolio and low mortgage placement don’t help them.

This is why we know that every bank is more than willing to provide new mortgage loans, and to make them more attractive it will make your payment easier. This information is also useful if you want to refinance your current mortgage: now is when.

Many indicators are used to measure whether a bank is a solid company. However, one of the most important is the loan placement and the default rate.

At Bancompara we have received hundreds of refinancing applications because the new interest rates are difficult to ignore.

5. Because the circumstances surrounding mortgage lending are now in your favor

Real estate prices will change depending on the market. Many people have seen their income canceled or reduced, making home buying cautious.

However, if you were going to buy or live a house for an investment before the pandemic, and you insured the down payment and your income, this is the time to buy cheap and then sell expensive, or whatever, a good one To make an investment.

Other crises give us an indication of what is to come: Both in the 2008 mortgage crisis in the USA and before the .COM crisis in 2002, property prices fell and gained value years later (at least a decade).

How to choose your property

If you’ve already convinced yourself and want to buy a house, keep these tips in mind as the impact of the crisis is likely to last for at least three years and it is important that you make an excellent choice.

Take your time to choose!

  • Select Done or Close to exit the properties. You save problems with delivery times and construction details, which look different on construction plans. Do it unless you have years to wait for delivery.

  • Rethink the location. People’s needs are changing. Office space is being reinvented. Many companies will be forced to make the home office permanent. Transport patterns are likely to change. Remember that.

  • Do not be afraid to pass on your offer. Take a risk and make your suggestion to the owner. The current circumstances mean that people consider offers below the list. Others will look for instant liquidity. If you receive a counter-proposal, you have already taken a step.

  • Think long term. Buying a home must be done long term if you want to consider it an investment. A decade or two is recommended. So be sure to see everything that affects your property. Examine the added value of the area. What will it look like in ten years? Will they build factories around them? Will they build next door in the first few years, but then will the area flourish? Will traffic improve or worsen? What is security like?

I hope I helped you make your decision.