The Impact Of Covid-19 On The Real Estate Industry
The recent Covid-19 pandemic has taken the world by storm. It has changed how billions of people all over the world live their lives. Lockdowns, masks, social distancing, and more are something many of us never had to deal with before 2020. But now they are commonplace and seem a little like the new normal.
In addition to impacting the health of millions all over the world, the virus has also taken a toll on the real estate industry. The industry looks very different than it did only a year ago. This article is going to go over a few of the major impacts that Covid-19 has had on the industry.
An Increase in the Use of Technology
Because of the various lockdowns in place, and the need to distance socially and quarantine in some cases, in-person viewings of homes slowed down across the country. Thankfully, technology was here to help.
Innovations like virtual viewings and meetings have become much more common and helped the industry stop completely stagnating. While not the same, they have filled the gap and helped home sales still be completed on time with limited in-person contact required.
Online home listings with detailed descriptions, photos, and videos also became more important. This is because open homes and viewings were much more restrictive if even allowed at all. And as UMoveFree wrote, you can even get free assistance online from experts who can help you find a home or apartment. All in all, there are several ways that technology has become more important than ever to the real estate industry.
It Led to a Massive Decrease in Home Sales
by slowing home sales down to a crawl. The uncertainty being felt around the world led several Americans to hold off on selling their homes. Some were worried about the potential health impacts of things like moving and showing off homes, while others simply didn’t want to sell when the economy was struggling.
There have been around 400,000 fewer homes (as of September) listed than expected since the beginning of the pandemic. With less supply, the number of existing home sales have plummeted. This is not for a lack of demand either, as many people are interested in buying, just fewer people are selling.
While new home sales weren’t as bad, many builders had to shut down their operations during the onset of the pandemic. As you could imagine, this led to far fewer homes being built, which hurt the already-short supply of available homes. By late 2020, homes sales have begun to climb, but the effects of the pandemic are certainly still being felt.
Interest Rates Have Sunk to Historic Lows
Another major impact that Covid-19 has had on real estate is that interest rates have sunk to historically low levels. This was done to stimulate a bit of growth in the economy. While the average rate has hung around between 3.6% to 5% over recent years, it has now sunk to well under 3% on a 30 year fixed mortgage.
This dramatic reduction in rates has introduced the potential for incredible savings of thousands and thousands of dollars over the lifetime of the mortgage. This has only led to more interested buyers, many of whom are unable to find a home due to low supply in many areas.
It will be interesting to see what happens to interest rates over the coming months and years. Some believe they will remain low for the foreseeable future, while some believe we could be seeing a hike in the future.
Home Prices Have Actually Risen
This large increase in demand has led to home prices actually rising throughout the pandemic. Whenever you have such rampant demand, without an equal amount of supply, you will always see an increase in prices. Finding a house in and of itself has been challenging for some, let alone one that is within your price range.
Because of this, many interested home buyers have had to go back to renting or seek other living arrangements. As more new homes are built, and more people no longer have cold feet about selling, we should see prices level off. But right now, homes are quite expensive, despite the record-low rates.
As you can see, Covid-19 and the resulting shutdowns had a major impact on the real estate industry. While things are starting to go back to normal in some areas, the true impact of Covid-19 on the industry is yet to be seen.
This is due to the effects of the pandemic still being felt. So until the pandemic ends, it will be difficult to know the true long-term impacts that Covid-19 ends up having on the real estate industry.