The real estate market right now can only be described as an enigma, with highly encouraging home sales statistics in complete contrast to the economic and public health crisis around us.
In fact, according to the National Assoc. of Realtors, contract signings are up 16% over this same week last year and home prices have bounced back or even exceeded pre-Covid levels in many metro areas around the country.
Here are some real estate trends we’ve seen as a result of the Covid-19 pandemic:
- Flight to the suburbs or rural areas.
Buyers are taking flight from the cities like never before, looking to relocate to the suburbs or even rural areas. There are several reasons for that urban exodus, including the desire to have more space and socially distance and the ability to work from home remotely.
- Red-hot buyer demand.
When the pandemic caused lockdowns, job losses, and shuttered businesses across the nation, many predicted a sudden drop in the housing market. That couldn’t have been more wrong, as buyers are actually doubling down on purchasing a new property, in large part due to low interest rates and the fact that the concept of “home” is more important than ever.
- But shrinking inventory.
However, many homeowners are staying put, “nesting” instead of downsizing or wanting to go through the inconvenience of putting their home on the market and selling. For that reason, For Sale housing inventory has shrunk in most markets around the nation.
- All-time low interest rates spur buying.
Rates keep going from low to lower in 2020, and just hit record all-time lows. In fact, we may even see a scenario where mortgage interest rates are lower than the inflation rate for the first time ever! Either way, home buyers and investors are big winners with low interest rates, which are expected to be favorable through the year.
- We’re going digital and virtual.
The “new normal” is now for buying, selling, and most real estate-related business to go online, as we’re practicing social distancing and trying to avoid person-to-person contact. Just about everything has changed when it comes to how we do business, including meetings, signings, and even viewing property virtually, buying sight un-seen.
- Amenities are golden.
More than ever, buyers are asking for listings with home offices, outdoor living spaces, swimming pools, and home gyms – and are willing to pay a premium for them.
- Opportunities abound.
While the market is still buoyed by high demand and low interest rates, that may change as the situation evolves. In June, approximately 4.8 million homeowners missed their mortgage payment, many of them in a forbearance. Additionally, no one knows the impact of high unemployment, and eviction moratoriums expiring.
But there are always abundant opportunities in any real estate market, high or low. In fact, some asset classes like mobile homes, apartments, self-storage units, and more do exceptionally well through every down market. Savvy investors may also be already stockpiling their cash in anticipation of a wave of short sales and foreclosures in coming years.
If you are looking to invest in real estate, now could be the best time you’ll see – but you need to understand the tax implications before you spend a dollar.