How First Time Home Buyers Were Affected By COVID In 2020 – Part 1
Stories From Real Listeners And Their Tales Of Buying Their First Home In A Global Pandemic2020, fun year? You’re not here to relive all the great memories. You’re here to find out what COVID did to the housing market, and if you can still buy a home in this mess. Let’s find out.
—If you are a frequent flyer of the show, maybe I should say welcome back. I took a little time off. 2020 was nuts. I’m back from my recording hiatus. I had some issues dealing with COVID in general, and then my son got sick. That was freaky scary but we are all good now. Let’s move on and get right into helping you. I got swamped during 2020 with all the first-time home buyers out there who were looking for this real-life information, not just people out there trying to sell you stuff. Making dreams become a reality took precedence in this global pandemic, but now we’re back. If you’re new to the show, you’ve never heard this before. Go ahead and subscribe right away. There are tons of free information for you in all the other episodes out there. Mostly what we’re trying to do is answer the big question, “How do you buy a home?” There’s plenty in there for you. If you want to start right here, that’s fine. Afterwards, you can go to our trailer episode. The introduction email to the show tells you how to maximize your experience and guide you to the best episodes for you. This is for you and everyone is at different phases of trying to buy a home. It gives you the lowdown on how this show can help answer all your questions. You can read this or jump right into that intro episode if you want to and find the specific episode that answers your questions. Let’s start with the pertinent information that you’re wondering about. How did COVID affect buying a house? Can you still find a way in the middle of a global pandemic to turn your largest monthly bill, that’s your rent, into your largest automatic wealth builder? The short answer is yes, you can. In real estate, timing is more important than location. Click To Tweet You can do this by getting educated and your education starts right here. It was an insane year, but a whole bunch of people out there bought their first home in the middle of a pandemic. Still skeptical? Here are some real-life stories from readers, firsthand 2020 tales that can help you in your journey if you’re planning on buying a home in the next phase of this mess, whatever that’s going to be. These stories are entertaining and encouraging. You’re going to get a lot of your questions answered and read no BS, real stories, and nuggets of wisdom that you can use to craft your own personal plan to make your dream happen.
A Military ManLet’s start with a reader who hit me up in July of 2019. It was a unique situation. He’s in the military and maybe not going to be in his next place for more than two years. We chatted a little bit, and then in the summer of 2019, he emailed me this. He said, “As we talked about, I tried making a pretty baller Excel spreadsheet to calculate a breakeven point on an amortized schedule for a mortgage. The math, if I’m doing it right, using the numbers for my situation, shows that the breakeven point where the theoretical resale of the home with only a modest bit of appreciation, minus the out-of-pocket expenses for the PITI.” If you’re brand new to the show, don’t worry about it. It will all make sense a little bit later. Going back to what he said, “The PITI, the future closing costs, etc., if that exceeds the cumulative expense of renting a comparable home at around the 32-month mark. That means moving out on the 24-month mark, what the Air Force would have me do and renting it out for even a breakeven cashflow at that timeline, at that point, as long as the market doesn’t tank, I can keep renting it and I’d be good thereafter.” That’s what he said. If that sounded like another language to you, don’t stress out. This dude is pretty intense. He was looking for some deep guidance. The goal of the show is to help you get there and for you to be an informed consumer. Don’t let some chump realtor snow you, learn on your own, and then find a caring experienced pro. I’m here to help with all that. You go to the intro episode, find out what episodes you should start with, and then jump to those to help you understand all those terms that he spit out. Let’s get back to the story. There was some uncertainty in his ultimate location due to his job. We kept in touch and we kept evaluating his position, then the pandemic hit. Now we fast forward to December 2020. We’ve been talking the whole time. Here’s what he says, “The last time we chatted, my wife and I were on the fence about buying. Because this past June 2020, I got a phone call one evening and found out that I had to start a program the very next day and we need to move. The military uncertainty is no joke. Luckily for us, it’s easy to get out of a rental lease. It wouldn’t have been as easy for us to sell a house during a pandemic, and the equity of only living in an overpriced home in Palmdale, California for eleven months. That wouldn’t have made the closing costs twice worth probably anything more than just breaking even on a Southern California rent.” Let me give you some commentary. Let’s break down that statement COVID style. First of all, in 2019, 2020, houses did go up in value. Eleven months of owning the home and gaining equity or appreciation, that’s the home going up and you making a profit in your value on your original purchase. That would have been good, but there are fees to buy and sell the home and he would have to pay them twice. He only would have broken even. On a side note, if he’d moved and kept that home and turned it into a rental, that could have been a viable option, but that’s a total baller move and you have to have some awesome spreadsheets to make sure you can do that. If you want guidance on that crazy financial scenario, hit me up on Instagram. Find @DavidSidoni and you can DM me or go to my website, DavidSidoni.com and contact me there. We’ll get deep into it. As for his statement, “It wouldn’t have been an easy sell during a pandemic.” Here’s what’s up with that. How did COVID affect the actual 2020 housing market? Even in the worst of time, humans need the basics: food, clothing and shelter. If you’re lucky enough to have been in decent financial shape, you could put on that giant plastic bubble, go out, tour homes, and get yourself some shelter. You could do it at stupid low interest rates. People did. Who is affected in any market? That matters most. That changes the most significant. Some people had to move or some people wanted to make a move in 2020. I know it’s crazy. Why? The all-important thing I say in everything in real estate is timing. It’s more important than location. Timing matters most in buying a home. Work with someone who knows all the hacks in real estate, and you will save thousands. Click To Tweet There was mad appreciation in January, February of 2020. Buyers were out in full force. If you’re not a total real estate dork like me who follows the market daily and reads the history of the last 50 or 100 years of real estate housing appreciation and depreciation, and I read that stuff just for fun. You didn’t know if you don’t study that close that January, February 2020 was an unprecedented rush on homes right before the pandemic. There were tons of buyers out there. Supply was low and demand was sick, super outrageously high. We’re talking bidding wars for any home that was available. Multiple offers on every home, sometimes 5, 10, even 20 offers on homes. You want to hear a real-life story. I’ve got one for you. This involves me in March of 2020, the last weekend before they had the big lockdown nationwide especially here in California. March 13th and 14th, I was selling a home. I had an open house that weekend. The first weekend we were ever on the market. We had 50, 75 groups come through. By Sunday night, I had six offers on the home, all of them over list price. On Tuesday, our governor shut down the state. On Wednesday, we had zero offers. All six of those people bailed. My seller started to freak out a little bit. I said, “Don’t worry.” It took all 5 or 6 days before everybody went, “COVID just move it.” We had four offers over list price. It was incredible. The lockdown slowed people down a little bit, but the demand was so high before COVID, the housing market kept trucking along. It kept going all year during COVID. I got personal stories of my local buyers here in Southern California dressed up like those yellow jumpsuit guys from Monsters Inc. with hazmats looking to visit homes. Even in the middle of a global pandemic, they were still bidding against 10 or 20 offers, sometimes going $10,000, $20,000 over asking price. Showing homes in Southern California was bonkers. Every appointment took longer than usual. There were no open houses, no drop buys, no pop ins. It was strict appointments on a tight timeframe. It felt like you had to wear hazmat suits. We had masks, gloves, booties, hand sanitizer, not to mention a healthy dose of fear. For me, 2020 got extra busy, taking the extra time to give the service the first-timers needed, making this huge purchase in the middle of this global meltdown. You all out there in podcast land had some time on your hands because the podcasts blew up. Our numbers went through the roof, beyond my wildest expectations. A lot of you found some new free time to listen to podcasts. You seriously started looking for guidance so much that I had to take a little bit of break from recording so I could continue the true mission of the podcast. That’s to be sure that I could contact back everybody who reached out to me, and helped you guys find the right realtor in your area so that you could make your dream a reality. Things got a little hectic for me and the rush to buy is still going on at the end of 2020. In the county that I live, supplies are off 50% from 2019, that means 50% less homes. We’re talking 1,500 less homes for sale from 2019, and the demand, the number of buyers for sale, if you take a look at the escrows that closed or the houses that got purchased compared to what’s out there now. It’s 2:1 buyers for each house for sale. Supply and demand, that’s a thing. Sellers of homes are starting to notice. It takes about six months for the public to catch on and see what’s happening in the housing market. Because of that, you’re going to see inventory grow in 2021 as the sellers realize and catch up, and then they realized that they’re a hot commodity. There are several other reasons people are selling during the pandemic. This mess has put a spotlight on a lot of deficiencies people see in their homes. They’re also seeing the price of their home appreciating, so they decide it’s time to upgrade. Maybe they decide they need some outdoor space for their kids, for their family or some place for them to socially distance and chill. Maybe they want a bigger yard or just a yard at all. Maybe they want more space to cook. Have you seen that commercial where they’re trying to cook Thanksgiving in a tiny little kitchen? Maybe they decided they want an extra room or office space. That’s a thing. You try running a business with your kids bouncing around. There’s also a need for rooms for the kids who might be stuck at home doing virtual schooling. It’s a Zoom economy these days. Everybody is trying to find a way to make their Zoom world the most comfortable world that they can. Research is showing that the city to country move is happening. Lots of people don’t need to go in the office anymore. They figured out that they can work virtually, and whether it’s them or their bosses figuring out. The bosses figure out, “I could save money. You don’t have to come to the office anymore,” or the worker says, “I don’t have to pay this outrageous San Francisco, New York, LA prices. I’m going to move out to the suburbs or maybe just take off completely.” You can't stop COVID-19 from happening. All you can do is to be prepared on how to handle it. Click To Tweet You can live wherever you want in your own little corner of the world. Pick up your house and bail. Move to some place where you can live in your own little paradise. I had one client that I’m helping to relocate from the very expensive area of San Francisco, California. It’s super expensive. They decided to go to Charlotte, North Carolina, and he’s taking a 20% pay cut to make that move. Why would you do that? He said he can get 50% more home in that cheaper part of the country. The sellers are figuring that out that homes are going to sell. It might take a little bit of time, a little bit of extra work with the safety issues, the disinfecting, the wiping down the door handles and the countertops, and all the COVID protocols. Yes, it’s happening just like restaurants, department stores, and the DMV. Selling and buying homes is still happening with new guidelines and new ways to maneuver throughout the store. Capacity restrictions, entering the home and appointments to get the buyers in to see homes, those are happening. Remember, I leave in Southern California, the worst COVID area in the country. We still found a way to figure it out. Guess what else got big in 2020? Video tours. I sold homes to buyers through FaceTime and videos I shot while I was walking around empty house by myself. Who are the crazy people out there that are trying to do this and buy homes in the pandemic? The planners, intelligent people who are behaving safely, but they realized the market was right for them with prices going up and mortgage interest rates staying insanely low. That means a low monthly payment, which is often equal to the rent that you already pay a little extra work, a little extra safety precaution. That meant a way better deal for them. If you’re thinking about this for 2021, maybe it’s time to suit up and give it a go. There’s more to that original story so let’s get back to it. He said, “The next move is scheduled for June of the coming year. Do you know any real estate agents in Florida?” This is my military guy from the very beginning. I said, “Yeah, we could find something for you.” He said, “We’ve been crushing the savings lately. We might be ready to pull the trigger.” He’s going to be moving to Florida towards the end of June 2021. He still wanted to do some research, but he thinks his finance is in order. He thinks he can do it with a VA loan. From episode 32, I got him in touch with Chris Griffith. That’s the VA loan specialist that’s out there and works in several different states. I hooked him up with a unicorn realtor. He is on his way to making this happen.
Patrick And KaylaHere’s another story. How about a couple that plans, shopped, and bought a home in 2020? Patrick and Kayla are some of my favorite folks out there. They started in January with me. They were looking to buy their first home in LA. I got them a lender. I got them a plan that worked. We worked the plan, took a few months to get our money in order. We got the research happening. In the middle of all that planning and research, March 2020 happened. After a couple of weeks of hesitation, they decided to brave the pandemic and try to take advantage of the low mortgage interest rates, which from last April 2020, they’re even lower now at the end of 2020, beginning of 2021. In mid-April, after lots of conversations and looking at lots of homes online, we saw our first home. It was funny. They live in Southern California so they didn’t have any gloves. Patrick showed up in these wool mittens because that’s all he had. He couldn’t find any plastic gloves in the store because they were all sold out. We ended up trying to buy that house, but supply and demand, there was a bidding war. They didn’t want to go too high in the bidding because there was still a lot of uncertainty back in April of 2020 especially with COVID. We took a break and saw some more homes. In the future when we saw homes, I brought my own set of plastic gloves so I could give it to them. We lost a few more homes in some bidding wars, but they finally got their dream home better than all the other ones we looked at in September 2020. How did they do it? They had an agent that was helping them, and they finally decided to go big. They put in a bid $90,000 over the list price. Why? They were competing with 50 different offers. Don’t freak out, this isn’t normal. This is a lame technique used by lame realtors to get a stupid amount of offers on a home. It’s dumb and I hate it. It doesn’t happen like that all the time. It’s not fair. It’s not right, but that’s why you’re reading. You need to understand all these tricks, and be able to hack all these tricks because selling a home is what we call a one-off. It’s one realtor and one seller selling one house. They don’t give a darn about you, about their customer service rating because they’re only selling one thing and they’re only selling it once. To understand the inside secrets, to help hack the system, that’s the pieces of the puzzle that you need. The biggest hack is having a real pro on your side who knows all those hacks, someone experienced. Remember, your realtor is free when you buy. I recommend that you reach out to me to find a unicorn realtor in your area. If you don’t know what it is, go back and read past episodes. Unicorn realtors are awesome. Your sister or your cousin, they might be a realtor. Since it’s free, why don’t you hire the best person you can instead of your sister or cousin who only sells houses part-time. Trust me, you’re going to save thousands when you work with someone who knows all the hacks. There's never a wrong time to buy your first home despite what's going on in the market. Click To Tweet I have another story to speak to this. I referred a client to a rock star agent that I knew. They wanted the realtor to show them a home immediately without having a pre-approval on a loan. Unfortunately, especially in COVID, this is putting the cart in front of the horse. It’s getting ahead of yourselves and going out of order. It’s like planning to go to an indoor concert this February 2021, before you figure out if this vaccine is going to work. It’s butt backwards. That’s rough because there is so much information out there on the internet directed at you, first-time home buyers. It kills my flow. What these carts before the horse that readers didn’t realize was that you can’t even enter a home without an approval. You can’t get an appointment during COVID. California needs a pre-approval. In the end, they took a step back. They use the podcast, got some more advice, and they hooked up with a solid realtor. They put in an offer on a home. Good for them. If you’re thinking that maybe you might be doing this, for more on getting ahead of yourselves and finding the actual right order to do your planning, go back to episode 33 with some folks who learned the hard way. I’ve got a ton of stories to tell. I’ve got to make this one a two-parter. There’s way too much going on here.
COVID In Home Buying ExperienceWe’re going to wrap this one up and I’ll get you more real-life stories of buying a home in 2020 and part two coming soon. In summary, COVID will be a part of your home buying experience. If you’re buying in 2021 or even 2022, I don’t care one way or the other how you feel about it. It doesn’t matter what you think about COVID. It doesn’t matter to the housing market either. You have to play by whatever rules are happening in your area. I don’t care what you think. I want to let you know that you may have to deal with restrictions and guidelines in some part of the country or in your corner of the world. It’s like weather. You can’t stop it. It’s happening. All you can do is be prepared on how to handle it. The most important thing to know is people are still finding a way to get this done. If you’re completely freaked out by even thinking about doing this during COVID, rest assured the National Association of Realtors has some strict disinfecting and cleaning protocols in place. If you have special circumstances, you can utilize video and super private tours while others wait outside the house. You can do it all by yourself. You can wait this whole thing out completely and go back to old episodes and work on planning for your big move. The goal of the show is divided equally. One, it’s how to plan to buy a home. Two, it’s navigating the actual home buying process. Go back to your episodes to help you work on your credit, your savings, reducing debt correctly, neighborhood drive by, research, how to use the internet to help you with your search, and more and more. These things take time, sometimes six months to a year or more. You should not be doing this on your own. You should have a guide, a Yoda, a Sherpa, somebody walking you through this. You don’t have to do this on your own. You can find fantastic people out there willing to walk you through this for free. We all learned a little patience in 2020. Get a guide to help you work more efficiently in your research. Listen to the podcast or find a pro who has already done the work for you and get it from them. If you need to wait this out, you’re going to be in spectacular shape when the time comes. You can do it all by Zoom calls. If you have someone, that’s great, that’s awesome, good for you. If you don’t have someone and you need someone to do those Zoom calls with, our unicorn nation of awesome realtors has grown with over 50 first-time buyers closing on homes in ‘19 and ‘20, and hundreds more in the planning phase. Go to the website, DavidSidoni.com, fill out the contact form and I’ll hook you up, or you can shoot me a text or DM on Instagram, @DavidSidoni. There’s a saying in financial planning, it’s never a bad time to buy your first home despite what’s going on in the market. That comes with a few caveats like, can you afford it? That may or may not be true for some of you during these COVID times. Some of you have gotten good growth in your business, or maybe even some job security. Maybe you’re a toilet paper manufacturer, or plexiglass installer, or a first responder, or maybe someone in the medical field, one of those heroes out there helping us. Maybe you work for Zoom, or maybe you sell office equipment, or maybe you’re a liquor store owner. Those guys are doing pretty good in 2020. Even the furniture industry. We bought two of those bunk beds, bunk beds on the top, desk on the bottom, just so we could lock the kids in their room during school hours. They aren’t cheap, but the peace and quiet, that was worth it. For some of you like my friends in the live entertainment industry, or you guys in the bar, restaurant business, or other small businesses that are hurting, this could be a time for you to hunker down and work on your planning. You do what you’ve got to do and take care of your family. If you’re struggling to survive, you might not be able to buy a house, but you might be in a position to start saving. There’s plenty to work on. You can go back through the seven-part series in the show, how to financially prepare to buy a home. The first of those seven starts at episode 19. You can go to DavidSidoni.com. There are a lot of things you can do while we wait for normalcy. The worst-case scenario is if you change some habits and things get even worse for you, at least you’ll have some good habits in place. Perhaps you’ll build a small savings toward easing your financial issues. That’s it for now. If this episode or any others have been helpful, please subscribe to automatically get part two, which should be coming out soon. More stories from more real people who bought during the pandemic. Write me a review so that you can help other people find this show so that their dreams can come true. You can also check me out on Twitter, on YouTube, but if you’ve got specific questions, hit me up on Instagram, @DavidSidoni. You can join the How to Buy a Home Facebook group, or you can contact me through my website, DavidSidoni.com. Until next time, remember, you can do this.
- @DavidSidoni – Instagram
- Episode 32 – Interview with VA Loan Specialist Chris Griffith with Tips for Vets, As Well As All First-Time Home Buyers
- Episode 33 – How These Planners Bought Their First Home and Learned Their Plan Wasn’t Enough! – Real Story #3
- Episode 19 – How to Financially Prepare to Buy Your First Home – Part I
- Twitter – David Sidoni
- YouTube – David Sidoni
- How to Buy a Home – Facebook group