MINNEAPOLIS — Concerns about the Coronavirus (COVID-19) have led to a cut in key interest rates this week.
And those cuts have caused mortgage rates to drop to a record low.
With those historically low interest rates, the Minnesota Association of Realtors expects to see a big jump in first time home buyers this Spring.
“Even a 1% change in interest rates will usually mean somewhere between 10,000 and 12,000 buyers will be able to enter the marketplace that couldn’t have afforded it otherwise,” Minnesota Association of Realtors CEO Chris Galler says.
For buyers, that means more competition.
To keep up with other home buyers Galler says you'll need to get pre-approved.
A higher down payment will help set you apart and being flexible with a closing date might also help.
"Because there will be some sellers that will either (A) want to move right away or (B) they may delay it and say can you delay the closing until later in the year," Galler says.
For sellers, realtors say you have the advantage this Spring.
With not enough homes to meet demand, realtors expect to see a lot of bidding wars.
They’re urging sellers to be patient and to wait for the best offer.
But it's not all good news this home buying season.
Seeing their retirement accounts going down in the stock market, some baby boomers might be worried about buying a new home.
The coronavirus is also a wild card and the housing market usually slows down leading up to a presidential election.
"I think it will happen around the middle of September, that last six weeks before Election Day in November,” Galler says.
And while interest rates are low now, realtors say they might not stay low for long.
"Rates are really focused on what's happening in the market place and if the real estate market picks up and they're taking a lot of mortgage applications, they'll put the rates back up," Galler says.
So, realtors recommend buying sooner rather than later.