Military families have long struggled with the difficult decision whether it makes sense to buy or rent a home at their next duty location. There are many factors to weigh when trying to make a housing decision, and perhaps one of the most difficult of all is the knowledge that, unless you are retiring, there will be another PCS around the corner.
Add in the stress of trying to make the decision to rent or buy while you PCS during a pandemic, and the uncertainty can feel near crippling.
As military families share their PCSing experiences during COVID-19, you might be surprised to learn that it might actually be a prime time to buy a home.
Let’s take a look at some reasons why.
In an attempt to continue to stimulate the economy, mortgage rates have dropped to historic lows. This is excellent news for would-be homebuyers.
According to Nerdwallet, as of September 15, 2020, the average rate on a 30-year fixed-rate mortgage was 2.969%, the average rate for the 15-year fixed-rate mortgage was 2.513%, and the average rate on the 5/1 adjustable-rate mortgage (ARM) was 2.996%. Rates are quoted as Annual Percentage Rate (APR).
If you are remotely considering buying a home at your next duty station, taking advantage of record-low mortgage rates offers several benefits, including a lower monthly mortgage payment (as opposed to higher market rates), less money spent in interest over the life of the loan, and the possibility of paying a home down faster by using a 15-year fixed-rate mortgage.
Related: Should You Buy or Sell a House During the Coronavirus Pandemic?
Many military members anticipate using the VA Loan entitlement for a future mortgage. If you currently have a VA Loan in place for another property, it is possible to hold two active VA home loans at the same time, but using a second entitlement can get a bit tricky.
But a VA Loan isn’t the only path to homeownership.
While it’s true that a conventional financing loan from a lender typically requires a downpayment of 10 to 20% (vs. the VA Loan’s 0% down payment), the good news is that homebuyer assistance programs have continued to be funded throughout the pandemic. To help maintain and promote home ownership, Housing Finance Agencies (HFA’s) operate in every state, and although each state differs a bit in which programs are offered, all HFA programs are aimed at increasing mortgage affordability and have not been shuttered due to the COVID-19 pandemic.
Normally, summer through early fall trends show a spike in housing inventory as more homes hit the market, with military and civilian families alike desiring to complete a household move before starting a new school year. In years past, home sales and availability tend to dip as fall wears on, and sales usually slow significantly near the year-end holiday season.
This year of course, is a year like no other.
The old adage used to be that most of the “good” housing inventory would be gone by late August or early September. However, sellers are continuing to move for a variety of reasons – including many military families that are still looking to sell their homes after experiencing a delayed PCS themselves.
Buyers could be positioned to find the perfect home in what would normally be considered a housing “off season.”
Take a look at The Effects of the COVID-19 Pandemic on Real Estate and Home Sales.
Suburban areas near larger cities, particularly areas that were considered COVID epicenters, are experiencing red-hot sellers’ markets, where the demand for homes has outstripped the supply. As the pandemic wore on, more than half of the nation’s 100 largest metropolitan areas began to see its residents flee city centers to the suburbs.
While this may initially sound like grim news for a military family moving to a large metro area, this population exodus could offer an ideal opportunity to snag a deal on prime real estate. It is still unknown just how the coronavirus will ultimately shape and change city landscapes, and although it may seem like it, the pandemic will not last forever. Eventually, cities will recover, and buyers may very well find that as recovery marches on, their city real estate buys will likely appreciate quite nicely.
Military life has always been challenging – pandemic or not. Although it may feel near overwhelming to try and face PCS housing challenges during the COVID-19 upheaval, you can take comfort in the fact that you are surrounded by a wealth of resources at MilitaryByOwner during this unprecedented time! We are here for you!