A week may feel like a long time in general, but during a pandemic, a week feels like an eternity. Things are changing so fast, and there is so much uncertainty out there that it’s hard to know what’s around the corner.
As we look ahead to the real estate market surrounding COVID-19, one thing seems to be certain – the long-awaited shift towards digital solutions for real estate is accelerating dramatically. For both buyers and sellers, the move to an online environment is offering a path through the chaos of lockdowns, quarantines, and uncertainty.
With that said, let’s try to make sense of everything that’s happening right now.
What is Coronavirus / COVID-19?
This global chaos is a result of the novel coronavirus, COVID-19. The new virus has swept across the globe in the first few months of 2020. Since it was first reported in China on the last day of 2019, it has infected more than 2.5 million people around the world, and developed into a pandemic that is disrupting the world in ways that none of us have seen in our lifetime. The virus is incredibly contagious, and it has a disproportionately heavy impact on the elderly and those with underlying health conditions.
As a result, much of the world is in lockdown – confined to their homes in an effort to slow down the spread and give health authorities the time to come up with effective treatments and, ultimately, a vaccine.
The effect on the global economy has been profound. Tens of thousands of jobs have been lost, travel has ground to a halt and it seems almost inevitable that we are in the early stages of a global recession that will have a profound effect on all our lives
Real Estate Market Before COVID-19
2019 was a solid year for American real estate. Early in the year, there were fears of a recession but those dissipated as the year wore on and buyers across the board regained their appetite. Low mortgage rates revitalized the market as summer drew to a close, and there was a definite swing away from urban settings towards suburban living. As explained by Rob Zelina to Forbes magazine,
“As people continue to place a higher value on livability, walkability, and a sense of community, the suburbs are taking on a more vibrant, urban aesthetic.”
There was undeniable growth in digital marketing within real estate during 2019. Services like Zillow and Redfin were able to grow their slice of the real estate market by using technology to showcase properties, find the right buyers, and facilitate easy transactions.
As the year drew to a close, the expectation was that real estate prices would continue to rise slowly and there would not be a recession in the near future.
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Impact of COVID-19 on the Real Estate Market
How quickly things changed. By the end of April, thousands of people had died, over 30 million Americans had filed for unemployment, the market had wiped out all of the gains made over the last four years and the future looked more uncertain than it had in a very long time.
So Where do We Go from Here
Whether you’re a buyer or a seller at this moment in time, chances are you’re re-evaluating your next moves and waiting to see what happens. The priority right now is to save lives while trying to get the economy moving again. Because the spread of the virus has been so uneven, different real estate markets have responded in different ways. For example, real estate activity in New York has ground to a complete standstill while real estate continues to press on in many places in the southwest.
It’s still a little too early to discern long-term trends, but logic tells us that the attractions of city life, such as congested bars, clubs, and events are going to be less desirable than smaller towns and more rural settings for the foreseeable future. Simply because you’re safer with fewer people around. That trend has already begun and small-town realtors should start preparing for a surge of interested buyers.
There are reports already of a shortage of housing stock, as owners may simply decide to hold onto their properties for the foreseeable future. In the commercial sector, it’s likely that the growth of shared workspaces such as WeWork is likely to stall as people are wary of sharing their workspace with countless others.
On the other hand, interest rates are cheaper than they have been since 2012 and for forward-thinking investors, this is a great opportunity to buy at a great price with great terms. There has also been a surge in re-financing of properties from people looking to save a few hundred dollars a month in mortgage repayments.
How Can Real Estate Agents Combat COVID-19
For realtors, the answer seems clear. They should be investing heavily in technology that will allow them to carry on selling property at a time when prospective buyers cannot be out doing in-person visits. That means evolving their entire business to be almost entirely virtual. It will become a necessity to start using services like virtual staging, 3D property tours, single property websites, and professional real estate photography on almost every property that goes up for sale.
With so much volatility in the air, the most important thing that both buyers and sellers can do is keep calm and get real clarity on their goals. Over-speculation at this time can be very dangerous. It’s best to begin planning for the worst and hoping for the best.
As a realtor, it’s completely understandable if you’re feeling some anxiety right now. These are uncharted waters for everyone. But there are a few things that you can do to fortify your position in the market and make sure you’re well-positioned for the rebound.
- Invest heavily in your digital presence. Use the tools that you have to ramp up your online visibility and make maximum use of tools such as virtual staging and 3D tours to cater to a market that is shifting online.
- Be understanding. Try to be empathetic and understanding if your clients are taking longer than usual to make decisions. Everyone is trying to figure out what comes next, and their goals may be shifting. You can remind them of their goals and that this could actually be a great time to invest in property, but you shouldn’t rush them as they make a decision.
- Don’t push yourself too hard. Automate as much of your process as you can, maintain your online visibility and then give yourself permission to slow down and wait for the wheel to turn. Remember…this too shall pass.