Just like the rest of the world, the US housing industry is on lockdown these days due to the Coronavirus pandemic. What is the outlook for the real estate market, the jobs in the industry, and what opportunities might exist in the post-pandemic world?
The outbreak of the COVID-19 pandemic has brought a number of changes across the entire world, from leading to shaky economies to emptying offices, hotels, and malls and providing the largest experiment ever in remote work.
The US housing market is no exception to the rule. In most states, real estate agents are facing difficulties with showing properties, new construction sales centers have been emptied, inspectors and appraisers can’t do their jobs, and even cash buyers can’t get an appointment.
Moreover, according to a Redfin Market Tracker Report, as of April 20th, home sales dropped by nearly 9.1% month-over-month between February and March. Also, the report shows a 1.2% year-over-year decline in sales.
Now, this is no surprise since, a recent Gallup survey, found out that only half of the people in the US believe that now is the right time to purchase a home. Plus, it seems that four out of five agents surveyed in earlier last month claimed that they saw fewer properties on the market, according to the National Association of Realtors.
Let’s see the outlook for the real estate market, the jobs in the industry and the opportunities that might exist in the age of Coronavirus.
Uncertainty is now the real estate market’s greatest future risk
Just like any other industry, the real estate market is struggling with uncertainty. Since no one knows when the coronavirus pandemic will be over, and how long the US’s economy will remain locked down, it isn’t easy to make exact predictions. On top of the uncertainty around economic factors, there’s also a lot of uncertainty on how lasting the social and emotional toll on how we live, work, and interact with each other will be, which may influence buyers’ behavior.
This isn’t the first economic crisis that has affected the real estate sector in the US. The Great Depression had also made home prices fall nationally, following the subprime mortgage crisis and the Great Recession.
And, it seems that, after a strong recovery of the market, the prices are predicted to fall nationally again by nearly 2-3% during these uncertain times, according to a study from Zillow. The study also predicts that the US’s GDP will have a 4.9% decrease in 2020 and a subsequent 5.7% increase next year. Moreover, the predictions on home sales include a very fast 50-60% decline that will bottom by the end of this spring, and a slow recover by nearly 10% every month through next year.
Now, recent data shows that these predictions are already playing out in the US. For example, web traffic to real estate portals had a 40% decrease in the first period after the pandemic was declared. Moreover, there was a nearly 70% decrease in new listings of homes for sale in markets like New York and East Bay. And, it seems that the number of weekly mortgage applications has also decreased by 17.9% in the first period of April.
A sneak peek at the future opportunities of real estate
It’s no secret that the ongoing global pandemic has brought some significant challenges for the real estate industry, not only in the US but all around the globe. Yet, thinking-long term, in a post-coronavirus world, there might be some great opportunities for those who choose to invest in them.
We get it: with significant layoffs in the real estate sector, lots of worrying predictions on house sales and prices, and the uncertainty of when it will all be over, it can be challenging to see any bright side of the situation. But, some significant opportunities are showing at the end of the tunnel:
Virtual tours to keep deals flowing
Coronavirus effects, such as social distancing and lockdown restrictions, have put the spotlight on virtual adaptations with so many things from concerts to classrooms to real estate tours that are taking place online.
Virtual tours aren’t a new trend in the real estate sector. Yet, they have been growing in popularity over the last couple of months as both buyers and real estate agents are locked in their homes.
So, some industry experts are predicting that the focus on virtual tours will carry on long after the pandemic will be over. Whether you are a real estate agent or own a real estate brokerage company, you may want to adapt to this trend as it seems to be a significant opportunity.
Pent-up demand in suburban and quieter spaces
If you have been in lockdown inside your home for a couple of months now like the rest of the world, you’re also most likely sick of seeing cement walls around you. And, guess what, you are not the only one.
Top realtors, such as the ones from NRIA, predict a surge in suburban housing demand in bigger places and quieter spaces. Zillow and Redfin also suggested that Americans can’t wait to escape the closeness of urban living and the growing risks posed by shared spaces in these uncertain times.
So, this is another unique opportunity that real estate professionals should keep in their minds as a post-coronavirus world opportunity.
A blending of retail and industrial space
It seems like experts also predict that the surge in grocery deliveries we have all seen during the pandemic is a significant opportunity for industrial real-estate developers.
Experts believe that grocery delivery services will continue to boom even after social distancing is over, which may have a ripple effect in real estate by accelerating the demand for more cold-storage industrial space closer to customers.
The blending of retail and industrial space will create the need to build more storage spaces or the need to develop larger fulfillment centers within stores with their own cold storage. Either way, this is another opportunity to explore in the post-pandemic world.