The Effect of the COVID-19 Pandemic on Real Estate
One of the biggest challenges faced by the real estate industry today is gauging the impact of the current global pandemic on home values. For home buyers and sellers – and everyone in the real estate industry – the year 2020 has been a giant question mark. The good news however is that the real estate market isn’t as heavily affected as it may seem.
In case you’re currently struggling with what you should do next, whether you’re planning to purchase a home or put your current residence on the market, you’ll be able to achieve your goals, pandemic or not. Keep in mind however, that some parts of the process may take a bit longer than usual to complete. Additionally, certain regions in the U.S. have different safety protocols in place, which could add more steps.
In this page, we’ll take a closer look at some of the recent trends in the real estate market during the COVID-19.
Demand for homes isn’t going away
Although real estate markets in some major cities are struggling, there’s a boost in real estate activity in many suburbs and rural areas throughout the country. According to a report from the National Association of Realtors last August, sales of previously owned homes increased by 24.7% — a record-breaking figure.
This trend is expected to continue, as there are a couple of reasons why people continue to buy homes. For example, there are some people who are simply looking for better homes as well as ones in more secluded areas. This is likely due to the uncertainty of when the pandemic will end, so might as well look for a nicer home to live in a safer area.
Changes in mortgage rates
Mortgage rates in the U.S. hit record-lows at the start of the pandemic. Lenders saw an ideal opportunity to generate activity in the real estate market, and reduced their rates. This was good news to homeowners planning to refinance and many home buyers took advantage of the opportunity. It was not enough to offset current clients who were unable to make payments, however.
With the CARES Act, forbearance, and other mortgage relief options, the temporary solution wasn’t very effective, and the market continues suffering the negative effects of the pandemic. As a response, lenders started implementing stricter lending qualifications. Although mortgage rates are still low today, they’re now more difficult to acquire.
Easier, more convenient steps due to technology
Websites, apps, and other online platforms have completely reshaped the way homes are bought and sold, even before the onset of the pandemic. Nowadays, you can search for available homes wherever you are, just by using your smartphone.
Thanks to apps and programs like Zoom, Google Meet, and FaceTime, people can complete real estate transactions even without meeting real estate agents in person. There’s also a surge in the popularity of virtual home tours, which give buyers an in-depth look at home through the comfort of their current residence, making the process safer and more convenient.
Thriving rental market
If you happen to have a home in a secluded location that’s available for rent, there’s a high chance it’ll attract the attention of someone willing to rent long-term, or at least for a couple of weeks. Without a doubt, the vacation industry suffered during the early months of the pandemic, and continues to do so today. But according to this report from USA Today, vacation homes and Airbnb accommodations in many areas are doing fine.
These days, space that’s available for rent is a valuable commodity. Even hotel chains, which have lost substantial amounts of revenue due to cancelled bookings and annual events, are now marketing their accommodations as options for stressed workers looking for a change of scenery. For now, the level of activity in the vacation rental market is likely to remain consistent, which is good news for rental property owners.
Drop in international buying activity
It’s no surprise that international buyers avoid investing in U.S. real estate due to the pandemic. This is a bad sign for home sellers, as it decreases the buyer pool. In most situations, demand from international home buyers increases home prices.
This however, is good news for buyers, as they’ll be facing less competition during their search for a new home.
These are just a few of the current trends to keep in mind if you’re planning to buy or sell a home during the pandemic. Again, while many parts of the home buying and selling process have changed, taking time to research, getting information on safety protocols in your area, and working closely with your agent will take you closer to your real estate goals.