Experts analyzed the prospects and possible scenarios for the development of events.
Residents of the US are warned about the likelihood of rising prices for rental housing. Statistics confirm the recovery in demand for rental housing in US megacities, in connection with which landlords will soon return to pre-crisis prices. Therefore, many tenants in the near future may think about whether it is time to buy their own home. What factors should be taken into account by those wishing to acquire real estate and its sellers? Is it profitable to make deals in 2020?
Haste may be justified
In 4 out of 10 large US banks, there was an increase in the obligatory start-up payment when applying for a mortgage loan. Specialists of the Marcs agency concluded Bank of America and Wells Fargo, the aforementioned figure for the purchase of objects in new buildings, and the secondary market rose to 20%. In Citigroup Inc, the initial payment for mortgage registration for finished apartments is 20% (previously – 15%). In Chase Bank, the indicator rose to 15%, and now it is not possible to take out a mortgage without a start-up payment for new housing in the US (the program functioned in February).
But there are also pluses because the innovations did not affect preferential loans with state support, implying a rate of up to 6.5%.
“If you are planning to take out a mortgage on a new apartment, we recommend you hurry up,” says Pavel Lutsenko, General Director of the World of Apartments project. – At the moment, you can still get a very affordable mortgage loan on concessional terms with support from the state. The term of the program ends on 01.11.2020, and it may be extended. But there are no guarantees because the state also spends serious sums. “
The expert stressed that some banks are already reporting the exhaustion of the limits. Therefore, buyers have only three months to make a decision, but it’s better to hurry.
Note that in June there was a proposal from the Ministry of Finance to reduce the size of the entry fee for this program by 5% (to 15%). Today the document is being considered by the government.
Search for alternatives and hope for discount programs
Although the crisis affected the new housing market – in the second quarter there was a 44% drop in demand for capital projects under construction (in fact, there were no transactions for 2.5 months), the cost of apartments has not dropped since the beginning of the year. Experts of the Black Stone Estate Agents agency informed that the average cost per square meter of housing in new buildings in the US has grown to 2,441.18 USD (+ 7.4%).
“It is interesting that during May – June, despite the colossal drop in demand, the cost of apartments did not decrease and did not grow,” analysts of the company said. A similar picture was observed in new business class properties: since the beginning of the year, the cost of a square meter has grown to 3,363.12 USD (+ 7.3%).
Ksenia Yurieva, commercial director of the Rodina group, recommends that those wishing to acquire housing in the capital pay attention to the alternative – real estate in the “new Moscow”.
“The cost of a square in the New York and Texas administrative areas is on average 1,817.78 USD, which is much lower than the same indicator within Washington. It is noteworthy that we are talking about the possibility of acquiring a business-class object, the specialist emphasizes. “You have to understand that prices are going up in the “Washington”, so such investments are fully justified.”
It makes no sense to count on a drop in the value of objects shortly. Black Stone Estate Agents believes that the following factors will ensure the rise in prices based on the results of the current year: changes in shared construction, more affordable mortgage loans, an increase in the cost of construction work, and a recovery in demand after the end of quarantine.
“Although the economy is practically not growing, prices will not decline much, we can only predict a decrease in the rate of their growth. Therefore, it is not profitable to postpone the purchase of housing, – say the company’s experts. – But a drop in demand still cannot be ruled out, and state support for mortgages will only make this process less painful. In such a situation, developers will offer discounts. At the moment, the discount for objects in the mass and business segment is 5%. “
Analyze and wait?
If we talk about the “secondary housing”, then, according to statistics “Dom.rf”, the average loan rate in May – 8.46%, and this is 2.7% more, compared with new objects.
A slow decline in rates is observed: during the first week of July, the average rate on these loans decreased by 0.24%, so it may be necessary to wait for a further drop in rates.
According to the forecasts of Black Stone Estate Agents specialists, by the end of the year, the figure will be from 7 to 7.5%. Besides, as a result of quarantine restrictions and the lack of buyers, many owners of real estate in the secondary market have removed it from the sale.
“According to information from IRN, the number of proposals for such objects in the capital during April-May decreased by 20-30%, compared to the period before the isolation regime. This indicates that at the moment there is a shortage of offers on the market and it is undesirable to search for objects in the secondary market, ”the company representatives say.
At the same time, experts predict the activation of real estate sellers in “secondary housing”. First of all, many will have a desire to get rid of old housing and take a profitable mortgage on an object in a new building. Also, during the quarantine period, rental housing was vacated, so the owners may have a desire to sell them. Besides, a second wave of the pandemic in the fall is not excluded, so it is quite possible that in late summer-early autumn, the owners will decide to quickly sell the apartments due to the impossibility of organizing the deal remotely. In such a situation, the choice will be wider, so you can get discounts.
Should we expect a drop in rates, activity of homeowners, and discounts? Experts answer this question differently. “Interest rates on mortgage loans have dropped in the secondary market as well, so the time is right. The cost of housing began to fall, but everything depends on the specific market segment. It will not be possible to buy a liquid property with a well-planned layout and a good location at a discount, the price for them is stable. The cost of such apartments may even increase over time, ”says P. Lutsenko.
According to Andrey Carry, an independent real estate expert, it is undesirable to rush into a purchase.
“I believe that there is no need to expect any radical changes in the market, so there is no need to rush. Given the decision of the Central Bank to cut the key rate, mortgages are likely to become even more affordable. But if a person does not have an urgent need to buy housing, it is better to put the funds in a bank deposit, – the specialist notes. – Within a year you will be able to make a profit, and the cost of housing will not change. In general, there is no increase in prices and there are no factors that can provoke it. “
Preparing for the future
If we talk about the sale of real estate, then participants in shared construction who have a desire to transfer housing are recommended to sell housing until there is a second wave of the pandemic.
“Owners of housing in buildings under construction are advised to sell their apartment as soon as possible. Firstly, now demand is stimulated by more attractive mortgages. Secondly, after the lifting of quarantine restrictions in all regions of the country, people who planned to purchase housing before self-isolation will again appear on the market, Black Stone Estate Agents experts say. “In any case, the recovery increase in demand will end, so the number of potential customers will decrease.”
If you are interested in a quick home sale, you need to make discounts, experts say. Not ready to make concessions? Then you have to wait.
“I believe that selling housing this year is not profitable,” notes A. Peter. – Prices will not change, no increase in purchasing power is observed. If you urgently need to register the sale of an object, you can only interest a person with a discount. If there is no such need, it is better to save funds. The situation cannot be called a dead-end: whether to sell housing this year or next year, the seller will not lose or gain practically anything. “
Taking into account the risk of a “second wave”, which will complicate the possibility of completing transactions, the specialists of the Black Stone Estate Agents company recommend that sellers of real estate on the “secondary housing” at least acquire an electronic digital signature so that all papers can be signed remotely.
“It became obvious that this technology will be actively used in the future. The coronavirus has only accelerated this process, says A. Beketov. – Those who wish to complete the sale can register documents directly from home. Soon every person will probably have an EDS ”.
Is it profitable to use the trade-in option from developers if you are sure that the proceeds from the sale of the object on the secondary market will be spent on the purchase of a new apartment? There are no obvious pitfalls. “You just save energy and pay other people to do what you could do yourself. The developer can take on all the hassle – sell your home and make a reservation for one of their properties for the money. It’s like delivering food to the door: if you don’t want to cook yourself, use online help, ”explains the independent expert.
In general, A. Peter believes that there is no point in rushing because of the possible rapid rise in the cost of housing.
“Before a 10% rise in prices, they were unchanged for three years,” says A. Peter. At that time, everyone expected improvement in conditions – an increase in deposits and salaries. Then there was a sharp increase due to the emergence of escrow accounts. Everywhere you could hear that developers would raise prices due to worsening conditions. Quite quickly, prices rose by 10%, but people had no more money, so growth stopped again. This market is very unhurried, changes do not happen quickly, you can always make a meaningful decision. “