The Economic Mend and Rebounding After COVID-19 for the Residential Real Estate Market
As we’ve all seen, the COVID-19 pandemic has created much turmoil and uncertainty. While this health crisis is an unprecedented situation, it’s important to keep in mind the future won’t necessarily be filled with doom and gloom. Before the coronavirus reached the U.S., the economy, including the residential real estate market, was in a very healthy place.
Undoubtedly, the country being in lockdown has placed a pause on the market, but it’s important to realize this is only temporary, and the market will stabilize.
The real estate market adapts
In March, the entire country essentially shut down and residential real estate sales took a sharp dip. While many industries seamlessly shifted online, the residential real estate industry wasn’t initially as prepared for the transition since it heavily relies upon personal interaction. With some creative thinking though, this industry has learned how to adapt and move forward during the pandemic:
- Agents are offering virtual and 3-D tours.
- Inspectors are using FaceTime and other video applications to check contractor work.
- Motivated buyers and sellers are continuing to pursue transactions and close deals through social distancing.
- Other related real estate services are relying upon video conferences and drive through “signings.”
These initiatives, among many others, have contributed to keeping the market going during the pandemic while still respecting social distancing requirements. New approaches will help propel the market to continue conducting post-pandemic transactions with whatever requirements are put into place by regulators.
The market is largely unchanged
While some experts feel a recession is imminent, it’s probably going to be a while before the housing market falls into a downward spiral. In fact, many indicators suggest that the normally booming spring residential market is simply on pause. The National Association of Realtors reported some interesting survey findings in May 2020.
- 42% of buyers delayed their intent to purchase for a few months.
- 51% of sellers delayed their intent to sell for a few months.
- 41% of buyers don’t expect to find lower home prices right now.
- 73% of sellers haven’t lowered the price of their homes.
This suggests the pandemic hasn’t curbed most buyers’ and sellers’ motives but that it has just set them on a new timetable – one that should see a jump once shelter-in-place requirements end. As long as agents and other professionals involved in residential real estate transactions remain creative and safe when conducting business with social distancing measures in place, buyers and sellers are likely to view these adjustments as a green light in going forward to make deals.
Real estate is already rebounding
Compared to last year, Zillow saw a 19% decline in page views during March, but this quickly rebounded in April with an 18% increase over the previous year. Phoenix is a great example of how things will go for numerous housing markets. Prior to the pandemic, the local market had shrunk, but the number of homes for sale recently jumped from 10,000 to 14,000 in just a few weeks. For Phoenix and other cities in similar circumstances, the market is simply being reset to where it should be.
After the pandemic
While it’s true that a record number of people have filed for unemployment during the pandemic, the loss of many jobs is largely temporary. Once stay-at-home orders expire, many people expect to go back to work. It’s also important to note that a large percentage of people have continued to work remotely, which interestingly has created some unexpected results:
- Numerous employers are deciding they like the remote work model.
- Architects will reimagine new home designs to accommodate work-from-home lifestyles.
Overall, new lifestyles will likely have a positive impact on residential markets. Going forward, it’s important we remember the current situation didn’t result from a slow buildup that typically prefaces a housing bubble. The market was incredibly healthy pre-COVID-19, so we really can’t compare current conditions with the 2008 burst. The forces present in 2008 simply don’t exist in 2020.
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