Should You Buy a House During the Pandemic?

Should You Buy a House During the Pandemic? | Having a dream house is everyone's wish and I wish to buy a comfortable house for my kids as soon as possible. But then, the pandemic hit the world in 2020 and the economy has become upside for almost everyone in the world.

My husband owns a house in Kuantan, Pahang but we live in Selangor. So we considered selling the house in Selangor/Kuala Lumpur but somehow the economic crisis makes us hold everything. They said selling a house during the pandemic is a bad idea, but buying a house is a good idea.

Read also: Should You Buy or Build a Home?

How to Prepare to Buy a Home in 2022

The time to prepare to buy a home in 2022 is now. Even if you’re not quite ready to put down a down payment and move in, you can - and should - start the ball rolling by meeting with a Realtor, identifying your budget, coming up with a plan, etc.

So how can buyers best prepare for a crazy spring market and reduce the chance of getting rejected 10 times in a row?

1. Talk to a Mortgage Advisor

Price dictates everything, so the number one thing someone needs to do is speak to a mortgage advisor. Even if it’s a year or two away, they can give you a plan and tell you what you’re eventually going to qualify for.

Buyers should prepare by making sure their credit score is pretty good, making sure they have good liquidity, and by having an upfront conversation with their loan officer and their Realtor and laying out expectations.

2. Trust the Experts - They Know the Market

You want to trust your mortgage advisors and your Realtors because they’ve done this multiple times. This is why a lot of people will lose their first offer - they’ll listen to realtor advice, and then they’ll do the opposite. The Realtor will advise them that it’s a multiple offer situation and if everyone else is doing X and you’re doing Y, there’s a good chance you’re going to lose.

3. Do Your Research

Start looking in the areas you want. Get familiar with the community such as the schools, get familiar with the different times of day, what the traffic flow is going to be like. Too many times people think they like a community because they’ve heard about it, and then they move in, and six months later they're not happy. So that's one thing I think people don't put enough time into, is getting to know the community and the area they want to live in. Like myself, I will like to find a house that is near to my kid's school, have a good community and facilities. 

4. Set Reasonable Expectations for Yourself

Getting outbid in this market - that’s just something that’s going to happen. You have to set the expectations going into it. As long as you’re patient and you have a plan, the right house is going to fall at your feet. You hear horror stories all the time - 10, 12 offers - but you also hear about the clients that get their home with the first offer, maybe the second offer. It’s all about timing.  

5. Don’t Be Afraid to Take a Chance

You'll miss 100% of the shots that you don’t take - if you put in an offer you have a chance to win, but if you don’t do anything you’re 100% going to lose. I guess if you think the house has all the needs you wanted, just grab the offer right?

Buying a new house or sub-sale?

Hence buying a new house or sub-sale also becomes a dilemma for buyers. Buying brand-new houses and sub-sale have pros and cons, and it will usually depend on the project and location, right?

As stated on the PropertyGuru website, there are various reasons that Malaysians buy newly launched developments, and why COVID-19 has significantly tipped the scale in favor of brand-new projects that includes :

 

1) For the availability of better grants

48% of survey respondents cited the availability of better grants as the reason why they prefer a brand-new property.

Notably, this is TWICE that of the results in H1 2021, where only 24% of respondents cited this reason.

In addition, there are currently a number of homeownership schemes targeted at helping primarily first-time and B40/M40 buyers. 

These include: 

• BSN MyHome
• Rent-to-Own schemes
• PR1MA 

2) For the new fixtures and fittings

Normal wear and tear are to be expected when you’re buying a sub sale property. With time, however, fixtures and fittings are bound to deteriorate – which can be a bit of a hassle.

Plug sockets need changing, shelves get wonky, and plumbing fixtures leak. Hence, 39% of survey respondents prefer brand-new properties for the shiny new items that come with the unit. 

3) More progressive payment schemes

The massive down payment that comes with buying a property has been a constant hurdle for Malaysians, even more so now.

35% of survey respondents are looking towards brand-new projects for their progressive payment schemes.

What does it mean by “progressive payment schemes”? When it comes to properties that are still under construction, payments are broken down into five different stages depending on their level of completion. 

For home buyers, this can help ease some of the upfront financial burdens, as compared to a sub-sale property. 

Not Sure If You Can Afford A Property? Use The 3-3-5 Rule!

First things first, familiarize yourself with all the associated costs involved in buying a property. Done? Great! Now you can start doing some quick math to calculate what property you can afford.

The 3-3-5 rule is a popular guideline recommended by the Singaporean Central Provident Fund (CPF) board – their equivalent to our EPF – which helps make sure you’re not spending above your means on a property.

How the 3-3-5 rule works:

3: You should have a capital of at least 30% of the property’s asking price.

3: You should not spend more than ⅓ of your monthly wages on your monthly mortgage repayment.

5: The price tag of the property should not be more than 5 times your annual income.

Using this rule helps to ensure you’re not overspending for the upfront costs, monthly repayments, and overall price tag. It is crucial for you to calculate your cost to estimate mortgage affordability based on income to avoid overspending right?

Whether it’s brand-new or sub-sale, there’s always more to learn so you can make better homebuying decisions. So if you thinking to buy a house today, just do it if your finances are stable, and if you find the right place yet.

My dream house is still in progress?