No matter where you stand politically or on the proper precautions for COVID-19, everyone has been somewhat affected by COVID and the Real Estate market is no exception. I am taking a break from my usual blogs to get to the business of Real Estate in an attempt to shed light on the frenzy in the market. Thanks for taking the time to read my blogs, stats are compliments of Reminder Media.
1. Even Tighter Inventory
Of course, the current limited levels of inventory would potentially be contracted even more as sellers resist making any major moves until they know that they will be able to find a new home on the other side of the closing. This may be especially true of luxury buyers who will struggle to find any property comparable to their current one and who may not be as motivated by the potential for marginally higher home valuations or low interest rates.
2. Even Lower Interest Rates
It’s hard to imagine that interest rates could go still lower, but they may in order to stimulate demand. In addition, current low interest rates probably won’t be going anywhere anytime soon. They should remain in place until well into the 2021 market, especially if a workable vaccine does not appear until the spring or if the economy at large suffers following renewed shutdowns.
3. More Motivated Buyers
Buyers in many markets are currently at a fever pitch, outbidding each other and buying properties with information-only home inspections. We may see many of these buyers stretching their budgets to the max in order to find the right property and nab it at a record low interest rate. In addition, many buyers may be willing to forgo their Wishlist in order to get into any available property now, then look for their dream home later.
4. Lagging First-time Homebuyers Sector
One area that may suffer is the first time homebuyer sector and the small in-town lofts and condos that are their preferred starter homes. As young professionals flee from the city and buyers in general try to avoid high-density residential areas, these smaller homes may be the one niche where inventory is less problematic, but there may also be less demand for them.
5. Return to Virtual Tours
One of the bright spots that facilitated the ongoing success of real estate agents in markets large and small was their willingness to craft new ways of marketing properties for sale. Virtual closings kept scheduled settlements on track while virtual open houses and home tours offered buyers a glimpse of available properties. In the past few months, many of those initial restrictions have eased, but we will no doubt see a return to virtual showings, video tours, and other socially distanced transaction management options.
6. Greater Suburban and Rural Demand
A second wave of shutdowns may convince even more companies to make work from home a permanent option for their employees. Just as we saw earlier this year, that spells good news for suburban and rural markets that normally don’t benefit as much from movements in the real estate market at large. With their larger lot sizes, increased privacy, and more robust recreational options, many buyers may choose to create their own little residential oasis far from the crowded cities.
7. Rising Demand for Long-term Rentals
Low inventory may create an increasing demand for long-term rentals as sellers bide their time before purchasing their next home. Homeowners who are selling at the top of the market may be reluctant to put that extra equity into a purchase that they consider overpriced. Long-term rentals could give sellers comfortable residential options while they wait for their dream home, and for market demand to return to pre-pandemic levels.
8. More Static Luxury Sector
While the luxury sector was an early beneficiary of the COVID-driven demand for larger homes with pools and tennis courts, many luxury sellers are now reluctant to look for greener pastures elsewhere. This could cause stagnation in the luxury market, thus luxury brokers will need to offer potential sellers a strong array of options to convince them to give up their current digs.