The coronavirus has brought with it a number of unexpected and unpredictable changes. With the job market and the economy facing major changes in direction, people’s interest in real estate has undergone changes as well. The global changes in real estate and the housing market, coupled with the uncertainty that still surrounds when this pandemic will end and what its long-lasting implications will be has made it difficult to come up with a market forecast.
Real estate property management has become complex and highly volatile. This is because trends are continuously changing and it’s difficult to have a solid grasp on whether things will take a turn for the worst or whether we’ll come out of this pandemic with different priorities on where we would want to invest our money. Despite the economy being forced into recession, there are some hopeful aspects for investors and potential home buyers. Here’s what you need to know.
1.The Housing Market Could Remain Steady
Based on what has been seen over the course of this year, there have been fluctuations in the housing market, but it has, overall, remained stable. This is because the demand for houses is still much higher than the available units in the market.
The interest rates have also lowered, which means that there’s an even higher demand now than there was before. Even currently, with the rest of the economy facing setbacks, the demand for houses only suffered a temporary low. What’s more, many potential home buyers have simply decided to invest in a house at a later date, which means they’re still in the market as probable buyers in the future.
2.Prices Haven’t Suffered Significantly
While many people have decided to postpone selling their homes because of the uncertainty that surrounds COVID, the prices at which homes are selling remain the same. In fact, the national median existing-home price this year has gone up by around 2 percent since last year.
For the remaining part of the year, it is predicted that house prices could remain steady without encountering any drastic falls or rises. There’s a forecast that there might be slight rise in prices by the beginning of 2021, which should keep potential buyers and sellers in the market.
3.Fewer Houses Being Sold
There has been a steady fall in residential property for sale now compared to the beginning of the year. This doesn’t impact the prices of the houses currently up—it mostly just affects the total sales being made. This is because the fewer the listing, the fewer choices a potential buyer has with respect to finding what they want.
There is a prediction, however, that sales will go up near the end of the year, potentially by August. Unfortunately, since there are several waves of the pandemic and it highly depends on the number of cases and deaths, it’s also possible that sales will not resume if another wave of lockdowns sets in. If the outbreak starts to settle down, there’s a high chance that markets worldwide will bounce back with a new vigour.
4.There’s An Expected Price Hike In The Long-Term
Making assumptions about the prices of houses and the state of the housing market after 2020 is extremely complicated because there are several factors that need to be considered. Even when everything has been taken into account, the drastic changes in the financial economy has made predictions a feat in and of themselves.
If we look at the long-term state of the housing market, there was previously a prediction that house prices would experience a hike in the next 4-5 years because of the rising population and demand for houses. With more people being able to afford the lowered interest rates, it’s now easier to finance mortgage costs.
5.Potential Buyers Have Different Priorities Now
When the year started off, there was an increase in wages as the economy prospered. Potential house buyers need years of savings to afford a house, and many of them faced an unexpected setback when the COVID-19 set in. This happened for several reasons, with many people losing their jobs and many facing pay cuts because of their employers not being able to afford previous wages.
Many families have had to focus on short-term necessities now, such as being able to continue paying rent, afford food and schooling costs, and pay for gas and car maintenance costs. While this does not necessarily mean these buyers are no longer in the market, it does mean that people could hesitate before investing in a house until the pandemic has settled down for good.
Because most houses in the market haven’t incurred any change in price apart from a slight increase, but potential buyers have faced decreases in wage, it’s uncertain how and when people will feel comfortable before making the decision to invest in residential property for sale.
6.What’s Happening For Landlords?
Because real estate isn’t only about buying houses, let’s look into what’s happening with landlords and rents after the pandemic began. Many people are now out of work, which has made it increasingly difficult to keep up with rent. Landlords have been making concessions for tenants that have not been able to continue paying their original rent, by making negotiations with better-off tenants that can afford paying more.
It has also become more difficult to build and rent out new property, because construction costs have risen, and many exports of important materials are at a standstill. With respect to office spaces and building construction, many offices have started working remotely full-time, which has reduced the appeal of constructing new office sites in 2020.
Most predictions are just that—they’re predictions based on what experts can observe and based on past experiences as well. Because a pandemic the size of COVID-19 has never happened in the past, the severity of its impact and whether or not it will have a permanent effect on the real estate market is difficult to determine.
However, it’s safe to say that the real estate market will not be seeing any significant growth for the next few months, at least.
Andrew Magro is Licensee at Harcourts Carlingford, a well-known real estate agency offering a full range of real estate services, specialising in residential, commercial, rental properties and property management services. Andrew has worked in the real estate industry for 16 years, which has given him a thorough knowledge of the Carlingford and Greater Hills areas.