Judy Rae

How COVID-19 Has Been Affecting Real Estate

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The saying “there is no place like home” might not sound as heart-warming as it used to a few years ago. After all, most of us have been locked down in our homes for a very long time, thanks to the novel coronavirus pandemic.

 

However, the pandemic has done more than changing what we feel about our homes. It has set the property market on fire, causing an upheaval that echoes the housing bubble burst we witnessed in the 2007 – 2008 financial crisis.

From low inventory to falling house prices to changes in demand for commercial real estate (CRE) and rentals—every sector of real estate is feeling the rashes of the COVID-19 whip.

While the future of the market remains uncertain, we expect the global economies and housing markets to rebound as many countries ease on lockdown restrictions. In this article, we’ll briefly touch on the various ways COVID-19 is affecting the real estate industry.

1. Shifting Real Estate Markets: Property Sales Go Virtual

As the world adapts to the new COVID-19 rules of living, the real estate market has been keen to comply and is shifting at a frenetic pace.

For instance, in-person meetings and ‘physical’ open houses are now a thing of the past. Instead, virtual property sales and Zoom consultations have become the new norm. Whether real estate sales will remain virtual after the pandemic remains unknown.  

But one thing is certain; virtual house viewing has offered hope to a troubled housing market. For instance, new real estate listings and showings have remained steady in the affluent suburbs of Westchester, New York despite the rising COVID-19 cases.

Realtors in many regions have devised strategies to work from home, which include carving a real estate office at home and using video chat tools that mimic face-to-face meetings to interact with their clients. The industry has also seen a rise in virtual property touring tools that have facilitated the sale of real estate property with no physical contact.

2. Back Country Is Making a Comeback

For years, the value of property in suburban and sparsely inhabited backcountry areas have plummeted, as buyer preferences shifted to urban areas.

Today, the big cities are losing some of their appeals as COVID-19 has proved to thrive well in densely populated areas.

Take New York City, for example, this metropolis with a population of 9 million has recorded nearly 235,000 cases out of the 431,000 in that state, while the suburban counties of New York, like the Rockland County, have recorded less than 20,000 cases.

People are moving out of the big cities not only because of the increased risk of infections but also because some of the biggest attractions have become inaccessible due to social distancing. The benefits that large cities offer, like global airports, sports, have all dropped.

3. Volatility in House Prices

The housing market has experienced price volatility since the coronavirus pandemic struck, with different experts giving contradictory projections.

For instance, in the UK, the Nationwide house price index for May showed a 1.7% decline from the previous month, the largest decline for 11 years.

However, things are different in the US, with noted house price increases since May. According to the Realtors.com Monthly Housing Trend report, the housing market reached an all-time low in Mid-April, only to rebound with a record median listing price surge of $330,000 in May.

The ongoing inventory shortages in the US that continue to worsen are to blame for the rising prices, even though houses are selling slowly.

 

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