How COVID Has And Will Affect The Real Estate Industry
2020 started much like every other year, but what’s ensued over the past 12 months has confounded us all. While the rest of the world ground to a screeching halt, there was no slowdown on the horizon for buyers or sellers. There were, however, a few critical shifts, primarily driven by COVID-driven changes in people’s lives.
One significant factor affecting the market was the rapid shift to remote work. Spending more time at home prompted many to rethink their abode, and many decided to sell so they could upsize. For urban dwellers, especially, having a smaller home or a condo just wasn’t practical with kids out of school and both parents working from home.
Those who chose to stay put may have remodeled, added on, or built an accessory dwelling on their property to support their “new normal,” with strong trends towards updated kitchens, expanded recreational space, and increased privacy.
We saw a massive uptick in sales in more suburban and rural areas, as well. When the commute disappeared, so did the need to be close to the city, and many found they were able to get a lot more house for their money if they looked further afield.
Interest rates have dropped to near nothing, prompting many to buy because it was suddenly affordable for them to do so. Real estate investors took up the challenge as well, taking advantage of low rates to turn a fast profit.
Due to higher demand and desirability in these areas, property values continue to surge, especially in neighborhoods close to schools, better hospitals, and green space. Other factors driving the trend include safety, stability, lower property taxes, and fewer lockdowns. We’d do well to recognize the change in demographic and economic distribution, as this could potentially impact the market for generations to come.
But it’s not just out-of-town properties that are getting their day in the sun. New priorities underscore walkability, quality of life, and community, and what that looks like is different for everyone. There are as many people flocking to the city as leaving, and with increased inventory in the rental market, prices continue to drop.
Get Ready For Another Real Estate Boom in 2021
According to Zillow’s senior economist, Cheryl Young, homes are often selling for much more than would have been expected just a year before. There are seemingly no “cool” markets anymore, though some have not advanced as quickly as others.
Industry experts project a seven-to-nine percent growth in volume over 2020 and an increase of 5.7 percent in prices. As the economy recovers, mortgage rates will rise. It will remain a seller’s market, although buyers still have the advantage of lower rates and plenty of inventory to choose from.
In discussions about industry growth, you’ll hear the term “despite” tossed around quite a lot with respect to the pandemic’s effect on the real estate market. However, it might be more accurate to say “because of,” as the changes we’re seeing are actually cause-and-effect.
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