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Buying a home in the midst of a global pandemic will either be the wisest or dumbest money move my husband and I ever made.
For now, our family of four is enjoying the perks and freedom of our new suburban life, especially after months of sheltering in place in our 1,000-square-foot Brooklyn rental.
Of course, the move didn’t come without hurdles, including a masked tour, an intense grilling about my finances, and quarantining our moving boxes in the garage. But we made it.
And we’re not alone. A growing number of households are considering permanently leaving New York City, the first U.S. epicenter of the COVID-19 outbreak, for the surrounding suburbs. In mid-April moving company moveBuddha saw a 250% spike in searches by New York City residents looking to relocate to the suburbs within 90 minutes of the city.
Around the country, reports find urban dwellers thinking along the same lines.
“You’re seeing a change in perspective now because while the city may have the best hospitals, you can walk around in the suburbs and not be on top of people,” real estate guru Ilyce Glink recently told me on my podcast “So Money.” “There’s a new value being placed on having personal space or space for your family. You’re seeing that everywhere.”
In our case, the pandemic didn’t spark our decision to move. We were already planning to leave. And for many people, moving amid such uncertainty isn’t the right choice. But the pandemic did accelerate our plans.
Here’s the behind-the-scenes look at our home purchase, surprises we encountered, and market developments to keep in mind if you’re on the hunt, too.
Strangest House Tour Ever
On Sunday, March 22, our family packed into the car for the 17-mile trek to Montclair, New Jersey. This would mark our fourth consecutive trip to the popular town, dubbed the “Brooklyn of New Jersey,” with the hopes of finding our “forever” home.
Streets were empty and the Holland Tunnel was vacant, as most people were already sheltering in place. We arrived in record time.
While open houses were no longer allowed, we managed to book an appointment-only visit. Wearing gloves and masks, we toured the colonial-style house without wasting any time.
Normally, we would have left our kids with a sitter so we could be as observant as possible. True story: At her first open house, my three-year-old managed to escape into a Hobbit-size closet tucked away in the third-floor master bedroom. But now with kids in tow, we skillfully sized up the home while simultaneously holding onto them for dear life.
The house checked off a lot of boxes: great neighborhood, tons of lighting, a spacious kitchen, even a dedicated bathroom sink for me.
The sellers had already moved out and the seller’s agent stayed distant in the kitchen, answering our questions from at least six feet away: Are the curtains staying? Can we buy the furniture?
We did feel a little nuts (and nervous) being there. But like most people, we weren’t going to buy a house without seeing it, so we arranged the safest way possible to view it.
Virtual tours are widely available, but if you’re hoping to see more of the interior in person, you can ask if it would be possible to pop inside for a very socially distant and masked personal visit — and only if you feel well and are seriously interested.
Buying During Chaos
When I texted a friend that I was in Montclair visiting a house that afternoon, she wrote back immediately: WHY????!!!
At this point, the country had some 30,000 confirmed cases of COVID-19. States were announcing stay-at-home orders daily. And the Dow had recently shed more than 4,000 points, its worst weekly point-loss ever.
Was this a smart time to buy?
We contemplated scrapping our plans and renting a few more months. With so much uncertainty, how could we make a massive financial decision? What if we lost work? What if real estate prices tumbled, making us the fools who bought at the height?
But I remembered that when it comes to buying a house, your personal timing is more important than the market’s timing.
We wanted to be in New Jersey to benefit from the great public schools, and we didn’t want to delay that opportunity another school year.
After selling our Brooklyn condo in early 2020, we had been ready to find our next place, one that promised a backyard for our kids and a microwave that wouldn’t have to double as a storage unit.
To be sure we could afford it, we mapped out the worst-case financial scenarios of losing work or part of our incomes and were confident we could cover our expenses with savings. It wouldn’t be ideal, but we would be prepared.
And the home we saw was perfect. Did I mention it came with an actual yard?
Making Your Offer Stand Out
It was nice to know that interest rates were low and many buyers, who were uncertain like us, were waiting it out.
That meant our odds were good, or at least better than they’d been in recent weeks. We had already been outbid for two homes, each in a five-way bidding war. In Montclair it’s standard for everyone to provide their best and final offer by a certain deadline for a home that has more than one interested buyer.
You only know how many “potential” bidders there are, which honestly feels like a scam to me. If I think there are eight other bidders — when there’s actually only three — I’ve overbid on a house that wasn’t as hot as I thought it was.
For one home, we offered $100,000 above asking price. We were the fourth lowest bid out of five bids.
On at least one occasion, I told my real estate agent, ”WHAT IS THE DEAL? THIS IS A HOUSE! NOT A SILENT AUCTION FOR A LONG WEEKEND IN CANCUN. CAN WE TELL EVERYONE TO RELAX?!”
But now we could benefit from the market’s timing. We imagined fewer people would be able to see this home, we could borrow at a cheaper rate, and we could have a better chance of landing the sale close to asking price.
In some hot markets where buyer demand is outpacing the supply of homes, you may find yourself in a bidding war.
My best piece of advice is to offer what you can afford — not a penny over — but sweeten the deal by offering to close as soon as possible. A lot could change as the year unfolds. Banks may decide to further limit credit and raise borrowing standards, making it harder to secure your mortgage.
And if I were selling, I’d want to cash in immediately right now and prefer a buyer who was eager to close fast.
Going Under the Microscope
Applying for a mortgage in a “normal” market is as fun as doing your taxes every day for 30 days straight. I know because over a decade in New York I’ve been through it three times (five if you count the refis). It usually involves loads of paperwork and financial scrutiny. During the best-case scenario, a bank approves the loan and gives you the official “cleared to close” after you wait a stressful 30 days.
But this isn’t a normal market. With an increased demand for more space and amenities, as well as a race to buy with historically low rates, prepare for longer wait times.
There is one upside: Because interest rates are dropping — and are expected to remain low for a while — you may be able to receive cheaper financing. (Tip: Our lender offered a “relationship discount,” meaning if we kept a minimum amount of money in a checking account with them, we could get an additional 0.25% shaved off the rate.)
A word of caution for the self-employed: If you run your own business like me, you’ll be going under the financial microscope. Prepare to provide two to three years of tax returns, as well as balance sheets and profit and loss statements. A letter from your CPA verifying your business is also standard.
In our case, things moved smoothly with the expert help of our loan officer. I briefed him on my business, income, and cash flow operations in advance of applying for the mortgage so he could anticipate any red flags from the underwriter.
He prepared me for the required documents and follow-up questions. For example: What is it that you actually do? How do you make money? How do you plan to make any money in a pandemic? All questions I’ve only ever gotten from my parents.
After putting in our offer — exactly the asking price — we miraculously received a “cleared to close” in 30 days, unimaginable in these times. (Thanks, Rob!)
Some banks don’t want to bear as much risk as before, so prepare for other potential market changes, including higher down payment requirements, a stronger credit score, and constant verification of employment. Our underwriter actually called my CPA for a second time — the day before closing — to verify my business was still in good standing.
The Final Hurdle
At a typical closing pre-pandemic, you might find several people around a long mahogany table and the ordeal could take up to two hours. That wasn’t the case for us.
Closings now vary by state or municipality. In New Jersey, in early May, it was a nonevent. My husband and I arrived at the title company office wearing masks and gloves. A very nice man escorted us to a boardroom where we sat, alone, and signed the papers. We could call our attorney if needed. The whole thing was done in 20 minutes. We did get to keep the pens and branded hand sanitizer.
Strangers Touching Our Stuff
Ah, yes. The move. The cherry atop the stressful sundae.
We were lucky to be able to purchase the furniture that had been staged in the house. No one had been living there for over a month, so we weren’t worried about possible COVID-19 transmission. That saved us time, money, and the hassle of moving, arranging, and buying new items in the middle of a pandemic.
Although we did hire professional movers to take our possessions from Brooklyn to Montclair, we stayed out of their way as they carried everything into our garage. We let it sit there for a week before removing boxes. A bit overprotective? Maybe. But it gave us peace of mind.
The Big Takeaway
Being in the suburbs and in our new house has made us more relaxed and happier, and we’re oddly not missing Brooklyn, where we lived for the better part of a decade. Since we’ve yet to experience our new town, the move feels a bit incomplete, but we look forward to everything reopening and settling in for good.
This was the right move for us, and now may be a smart time to buy if you’ve already been thinking about owning. Be prepared for extra steps and a longer wait time. And if holding onto your cash will give you financial security, don’t rush into buying.
There’s no harm in waiting if the moment isn’t right for you. Your perfect home will wait for you, too.