A few months back, I was thinking of how to sell my house. While it was a thought to which I never gave much attention, I have kept reflecting upon it. Did I make the right decision by stalling? Perhaps not.
My story is not different from what other people have in their minds. A close look at the real estate market will show you how the patterns have changed since coronavirus hit the world. Over time, we are witnessing newer inclinations, including in the processes of selling houses.
These aspects bring us to one critical question. Is the real estate industry transforming? Maybe we are looking into a revolutionized space soon. Well, unless we piece together the various aspects that seem to be trending, we might never answer this question comprehensively.
It is in this light that we take a look at some of the critical factors that are slowly reshaping the real estate industry. They include the following.
In the wake of COVID-19, the world has witnessed an unprecedented decline in economic activities. Most markets, including the real estate industry, have ended up closing. It is because of this economic strain that banks have chosen to lower their interest rates.
Lowering interest rates only implies that mortgage rates will most likely remain below 3%. This move is good news for various consumers, including current and potential homebuyers and sellers.
A decline in interest rate implies that people will be motivated to own houses. That is because the lower the rate is, the lesser strain a buyer feels. Ideally, it improves the level of affordability, which increases demand.
On the other hand, sellers will be confident of getting more buyers. For instance, if I want to sell my house fast, I will wait until the interest rates are favorable to buyers. A competitive market will, indeed, come in handy in guaranteeing them more profits in the long run.
• A Decline in construction
Before the coronavirus, most people believed that there would be a construction boom. By December 2019, builder confidence was at its peak. In this regard, therefore, an increase in construction was a valid idea. However, most things have taken a stall in this field.
Various uncertainties in the market are now evident. It will be hard to assume that builder confidence will increase after the pandemic fades away. Undoubtedly, it will take time, perhaps over a year. While they predicted an increase of at least %, statistics show that the figure is close to an impossibility.
While at it, you will witness that most factories are not open. Lenders are also relatively jittery. These two aspects imply that there will hardly be enough materials for the construction of homes for sale. On top of that, a change in contractual obligations and terms will be inevitable. This aspect could only worsen delays.
• Luxury Housing
2020 is a year where most millennials will buy their houses. Interestingly, studies indicate how much they value luxury spaces. For this reason, if there are any homes for sale that they will commit to, it should be topnotch.
Typically, most potential owners are looking forward to having enough state-of-the-art amenities in their homes. Movie theaters, community parks or gardens, and high-end gyms seem to attract most people, whether tenants or buyers.
Besides, you will witness that luxury houses come in handy in improving universal living experiences. It is an approach that will be part of the business ecosystem too. Won’t you love this redefined space?
• Enhanced technology
Over the past few months, we have witnessed an increase in the need to maintain social distances. It has come in handy in fighting the prevailing coronavirus. It is at this point that technology comes in handy. It will be an essential platform for tenants and homeowners, especially in improving communication.
Technology plays a central role in automating activities. With this, you will not need to worry about too much mobility or even hassles in accessing communication. It will be much easier to monitor payments, get tenant data, and keep receipts.
Besides, embracing technology in this field will be vital in minimizing fraud. There will be enhanced safety as well as transparency in data management. This aspect will help in cushioning homeowners against losses in the long run.
• A decline in rent and home prices
Towards the end of 2019, house prices seemed to rise relatively slowly. This trend is likely not to persist in the better part of 2020. Remember, there is an increased level of uncertainty in the field, which means not many people will be out there looking for new homes.
On the other hand, most tenants tend to prefer short term leases now. That includes month to month arrangements. With this level of inconvenience, there is a high chance that the rental rates will go down much sooner. While the rate will not be as significant, it will still be much lower.
General effects of coronavirus on the real estate industry
Selling houses during this covid era is going to be tough, no doubt. But will it stop every operation in the industry? No. Ideally, it would be right to highlight some of the most critical areas where the pandemic is likely to affect us. They include the following.
• Most rental apartments are most likely going to have jobless tenants. Most tenants will lose their income during this period, and it will take a toll on the industry
• Most people will start working from home, even after the pandemic. For this reason, most offices will remain relatively empty. It could force some of them to scale down, which implies a loss of income too
• There are continuous disruptions in shipping. For this reason, most warehouses and storage are likely to remain empty for a relatively long time
Indeed, the world is longing for that day that the pandemic will be no more. But regardless of all these, we should be ready for the changes that the real estate industry is experiencing at the moment.