The Coronavirus global pandemic was totally unexpected and caught everyone unawares. It hit fast and hard as economies collapsed, among which the real estate market is included. Due to the social interaction rules and stay-at-home orders, home sales began to decline, dropping to an all-time low in some locations. In this article, I will be discussing three major impacts the crisis has had on the real estate market and hopes for the foreseeable future.
Search for Houses Declined Greatly
During the Covid-19 pandemic, many potential home buyers lost their confidence in the real estate market. According to a research study, about 80% of potential home buyers quit or delayed their search for new homes. This was due to the circumstances at the time. The stay-at-home orders prevented most from viewing listings in person. A critical factor most buyers do not skip over when purchasing or renting properties. Millions lost their jobs and had to reconsider if buying a home in a preferred location was the best course of action to take considering their finances. However, many potential buyers still viewed listing photos indicating that the intention to buy was still present, but the current circumstances had to be factored in.
Huge Decline in Property Value
Due to the lack of searches for available real estate and an increase in the number of infected persons within regions, there has been a great decrease in demand, thus decreasing market value simultaneously. This declining market value is a consequence of the law of supply and demand. There is a great amount of supply of listings but less demand for them, resulting in a drop in mortgage rates. For ready buyers, this will mean a purchase of properties at a much affordable rate. However, they will have to deal with the repercussions of doing so. Will the property's value continue to decline once the pandemic is over or will it increase later on? This is yet to be determined.
The Future of the Real Estate Market
With both residential and commercial property owners unable to pay mortgages on their properties, the real estate market appears to be on the verge of collapse. Restaurants, gyms, and other small businesses have been shut down due to the absence of customers. To prevent millions of homeowners from being put out on the streets, the government issued a moratorium on foreclosures, ensuring they have a briefly extended stay on their properties if unable to afford their mortgage during this period. In the long run, for those who have suffered financially during the pandemic, buying a property may become increasingly difficult as mortgage credit may become impossible to get, and tighter restrictions on mortgages could arise.
While it is impossible to predict the future, it is safe to say that the market will be more accommodating to work-from-home individuals who require less commute. Also, amenities that will contribute to the health and safety of occupants will be included in new and old properties.