How the COVID-19 Crisis Affected Home Purchase Decision Making

The COVID-19 Pandemic wrought havoc on many aspects of human life. One aspect that is not readily as obvious as immediate health concerns and job loss is the pandemic’s effect on consumer home purchase decision making. The crisis has forced potential home buyers to take more time in weighing their decisions with the uncertainty of the times.

Photo by Vlada Karpovich

Nothing speaks uncertainty for homeowners more than overdue mortgage or housing loan payments. This feeling is easily passed on to would-be homeowners who understandably would like to avoid the same scenario. How exactly are potential home buyers reacting to the current situation?

Wait and See

When there is a threat to the regular flow of income, the initial reaction is to either halt new purchases or avoid entering long-term financial commitments such as home loans. This was how many consumers reacted as seen through the sharp decrease in buyers actively looking for homes. Lockdowns, quarantines, and other health-related measures limited physical movement as well, inadvertently affecting buying behaviors.

A big part of buying homes is visual. Not being able to view prospective new homes physically either because of  the sellers’ reluctance to welcome home viewing in the pandemic or the buyers’ misgivings for possible exposure dampens any chance to follow through with an actual purchase. After all, getting a home loan equates to a serious financial responsibility which may not be worth taking for a half-hearted purchase.

Virtual House-Hunting

House-hunting need not be put on complete hold especially for something which does not have a definite end date such as the pandemic. The current situation may be viewed as advantageous by some considering the lesser demand and higher supply of possible home choices. It would be wise to start house-hunting preparation.

Virtual home viewing can be done at the comfort of one’s home. Many real estate agents have adapted to the needs of the times by providing virtual tours. It would also be an ideal time to assess financial capability with the market prices of homes of interest. Using the Mortgage Calculator to determine affordability easily provides an overview of loanable amount based on income. This removes the guessing game and allows borrowers to make informed decisions while covering as many home options online.

Tighter Lending Practice

Many new borrowers encountered some form of delay in mortgage or loan processing especially during the very critical period of the pandemic. Banks and other lending institutions are facing unprecedented borrowers’ default in mortgage payments. On their part, many borrowers watched their credit ranking go from excellent to poor as businesses closed and jobs dwindled, not due to their fault.

This led to tighter lending practice, making it more difficult for consumers with bad credit to secure a home loan. Those who managed to maintain their financial stability in spite of the crisis found themselves with more options. Not many however are jumping to make a home purchase as they continue to wait for the situation to improve.

My Say

Any major change or disturbance from the norm such as the effects of the COVID-19 pandemic will always cause major ripples in financial decisions. In an instant, it can totally reverse a plan that has been set for years. Thus, it always makes sense to understand one’s financial standing and prepare for eventualities. Home purchase to many may appear out of reach at this time but history tells us, we will recover and we can again dare to dream.