Real estate is one of the biggest fields affected by the coronavirus pandemic. General economic anxiety has resulted in less interested buyers, and it is harder for sellers to show homes, host open houses, and schedule inspections. However, after experiencing a sharp decline in sales, the industry is starting to look beyond the virus.
Consumers Remain Confident in the Housing Market
One of the biggest influences on real estate prices is consumer confidence. To put it simply, if people think the housing market will go down, they pay less and buy less, and the market does drop. The good news is that COVID-19 does not seem to be damaging consumer confidence too much. According to the Conference Board’s consumer confidence index, expectations for the next six months have risen by 10 points. This shows a hope for economic rebound that may be reflected in future buyer activity.
Prices Rise as Supply Drops
Even before the virus, supply of homes was dropping. Less homes were being built, and many people were not expressing an interest in moving. Once the COVID-19 outbreak happened, many people pulled their properties off the market. This has led to a lack of supply while there are still plenty of interested buyers. For example, economists predicted a 22 percent decline in sales for new homes, but there was actually a 1 percent increase instead. Sellers are still listing their homes at pre-virus prices, and buyers are agreeing to these costs. With mortgage rates at a historic low, buyers are willing to pay higher prices. Some experts predict a 5 percent increase by the end of 2020.
Market Trends Towards Residential Instead of Investment Purchases
Something to keep in mind is that most real estate growth after the pandemic will probably be in residential areas. Commercial properties have taken a huge hit as retail spaces, restaurants, and entertainment venues close. Most investors in these fields are looking to hold on to their current portfolio, not make risky bets. Meanwhile, residential areas are seeing a huge growth. After being stuck mostly at home for months, many people are taking a second look at their current living situation and wanting to make a change.