Written By: Jacquelyn Annete García Vadnais
Covid-19 has been one of the greatest global challenges in many of our lifetimes. The virus has impacted many countries in the world and has had an effect on a multitude of industries, which has in turn resulted in a ripple effect worldwide. Now as the pandemic is beginning to slow down, the question on many individual’s minds is what the world is going to look like post-Covid-19 and how investors are able to make the right decisions to recoup some of their losses that they experienced due to the pandemic. In terms of real estate, there are many questions regarding how the real estate market is going to look post-Covid-19 and how real estate investors can find the optimal investments for their portfolios. To learn more about important trends that Covid-19 has caused in the real estate market, review the information below:
Projected Trends to Consider
Increased Digital Showings
One of the trends that was forced to be implemented during the mandated quarantine due to Covid-19 was digital showings. Digital showings were implemented to keep the employees and clients of major real estate firms safe. However, digital showings also allowed a larger pool of buyers to see potential properties in a walkthrough that provided more insight than a simple photograph or video of a listing. In the post-Covid-19 market, it is likely that digital showings will continue on some scale, particularly for buyers that are looking to make a purchase in a locale that is far away from their present location.
Desire to Relocate from Certain Major Cities to Suburbs
Some of the urban centers, particularly in the United States, have seen a mass exodus from residents due to a large range of factors. For example, New York City has seen many residents relocating due to increased crime, fear of getting Covid-19, and an overall decline in the quality of life in New York City. What this has caused in the suburban markets surrounding New York City is an increase in house prices and overall sales. What some New York City residents have found is that they enjoyed their time in the suburbs and many of them are opting to stay full time or to have a second home there.
Decline in Commercial Real Estate Due to Remote Work Model
The remote work model is something that has exploded due to necessity during Covid-19. Many business owners are weighing their expenses heavily right now due to the profound economic impact Covid-19 has had and are asking themselves whether each one of their physical office spaces is necessary to cut costs. Granted there will always be a market for commercial real estate; however, there is projected to be a trend of certain smaller businesses deciding to opt out of an in person office space, which will have some impact on the Commercial Real Estate sector.
Sharp Price Declines in Urban Markets
Due to the trend of many residents leaving larger urban cities from the increase in crime and fear of mass spread of Covid-19, there has also been a price decline in certain urban markets. New York City, for example, has a large supply of listings and not a great deal of demand. The increase in supply of real estate listings is from residents leaving and trying to cash out combined with the existing typical inventory that New York City sees on its market. Between March 23 and August 16, Manhattan sales were altered by 56% year-over-year. For properties that had a price of $4 million or above, sales were down close to 67%. New listings were down by 21% and listings priced at over $4 million and above were down by 35%. Particularly in the luxury sector, this creates an over abundance of supply with buyers able to negotiate incredible prices for those that want to invest.
Increase in Foreclosures & Short Sales
For real estate investors looking to make profit through increased equity upon purchase, Covid-19 has increased the amount of foreclosures and short sales as well. This trend will likely continue for at least one year after the Covid-19 pandemic is officially over because there have been record levels of lay offs and unemployment that have not been seen since the Great Depression. Individuals who successfully owned homes previously perhaps had a sharp and unexpected decline in income. Those that are trying to protect their credit score in the best way possible will try to opt for a short sale if they can rather than let their home go into foreclosure. For those that don’t have another option, many foreclosures are inevitable, which is an enormous opportunity for real estate investors looking to buy lower, rent for a time or decide to flip the home after some renovations.
Increase in Overall Home Purchases
Across the board, the pandemic has caused many buyers to reevaluate their priorities and establish a sense of permanence if they are able to. Individuals who were renting previously have experienced a desire to buy real estate in a place where they were secure. For some, this is the suburbs, for others, this means investing in an urban city and waiting for conditions to improve and price values to increase once more.
Final Remarks
Covid-19 has absolutely impacted the real estate market in a profound way. What real estate investors have to be very careful about is to be sure that they are making sound investments due to the constant volatility caused by Covid-19. There are absolutely opportunities to make substantial yields for properties acquired during the Covid-19 pandemic and after; however, it is essential to study the trends and attempt to make the best possible investments during these times of uncertainty. It will be fascinating to see how the global economy recovers in the years after the Covid-19 pandemic and what sectors of the markets are forever altered as a result of Covid-19.
Covid-19 has been one of the greatest global challenges in many of our lifetimes. The virus has impacted many countries in the world and has had an effect on a multitude of industries, which has in turn resulted in a ripple effect worldwide. Now as the pandemic is beginning to slow down, the question on many individual’s minds is what the world is going to look like post-Covid-19 and how investors are able to make the right decisions to recoup some of their losses that they experienced due to the pandemic. In terms of real estate, there are many questions regarding how the real estate market is going to look post-Covid-19 and how real estate investors can find the optimal investments for their portfolios. To learn more about important trends that Covid-19 has caused in the real estate market, review the information below:
Projected Trends to Consider
Increased Digital Showings
One of the trends that was forced to be implemented during the mandated quarantine due to Covid-19 was digital showings. Digital showings were implemented to keep the employees and clients of major real estate firms safe. However, digital showings also allowed a larger pool of buyers to see potential properties in a walkthrough that provided more insight than a simple photograph or video of a listing. In the post-Covid-19 market, it is likely that digital showings will continue on some scale, particularly for buyers that are looking to make a purchase in a locale that is far away from their present location.
Desire to Relocate from Certain Major Cities to Suburbs
Some of the urban centers, particularly in the United States, have seen a mass exodus from residents due to a large range of factors. For example, New York City has seen many residents relocating due to increased crime, fear of getting Covid-19, and an overall decline in the quality of life in New York City. What this has caused in the suburban markets surrounding New York City is an increase in house prices and overall sales. What some New York City residents have found is that they enjoyed their time in the suburbs and many of them are opting to stay full time or to have a second home there.
Decline in Commercial Real Estate Due to Remote Work Model
The remote work model is something that has exploded due to necessity during Covid-19. Many business owners are weighing their expenses heavily right now due to the profound economic impact Covid-19 has had and are asking themselves whether each one of their physical office spaces is necessary to cut costs. Granted there will always be a market for commercial real estate; however, there is projected to be a trend of certain smaller businesses deciding to opt out of an in person office space, which will have some impact on the Commercial Real Estate sector.
Sharp Price Declines in Urban Markets
Due to the trend of many residents leaving larger urban cities from the increase in crime and fear of mass spread of Covid-19, there has also been a price decline in certain urban markets. New York City, for example, has a large supply of listings and not a great deal of demand. The increase in supply of real estate listings is from residents leaving and trying to cash out combined with the existing typical inventory that New York City sees on its market. Between March 23 and August 16, Manhattan sales were altered by 56% year-over-year. For properties that had a price of $4 million or above, sales were down close to 67%. New listings were down by 21% and listings priced at over $4 million and above were down by 35%. Particularly in the luxury sector, this creates an over abundance of supply with buyers able to negotiate incredible prices for those that want to invest.
Increase in Foreclosures & Short Sales
For real estate investors looking to make profit through increased equity upon purchase, Covid-19 has increased the amount of foreclosures and short sales as well. This trend will likely continue for at least one year after the Covid-19 pandemic is officially over because there have been record levels of lay offs and unemployment that have not been seen since the Great Depression. Individuals who successfully owned homes previously perhaps had a sharp and unexpected decline in income. Those that are trying to protect their credit score in the best way possible will try to opt for a short sale if they can rather than let their home go into foreclosure. For those that don’t have another option, many foreclosures are inevitable, which is an enormous opportunity for real estate investors looking to buy lower, rent for a time or decide to flip the home after some renovations.
Increase in Overall Home Purchases
Across the board, the pandemic has caused many buyers to reevaluate their priorities and establish a sense of permanence if they are able to. Individuals who were renting previously have experienced a desire to buy real estate in a place where they were secure. For some, this is the suburbs, for others, this means investing in an urban city and waiting for conditions to improve and price values to increase once more.
Final Remarks
Covid-19 has absolutely impacted the real estate market in a profound way. What real estate investors have to be very careful about is to be sure that they are making sound investments due to the constant volatility caused by Covid-19. There are absolutely opportunities to make substantial yields for properties acquired during the Covid-19 pandemic and after; however, it is essential to study the trends and attempt to make the best possible investments during these times of uncertainty. It will be fascinating to see how the global economy recovers in the years after the Covid-19 pandemic and what sectors of the markets are forever altered as a result of Covid-19.
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Jacquelyn Annete Garcia Vadnais is an Investment Consultant and field expert blogger for Barracuda Consulting.
Jacquelyn has a JD/ MBA from Suffolk University, an LL.M in International Law from the University of Miami, and a B.A. from the George Washington University in International Affairs with a Concentration in International Politics. Jacquelyn speaks English, Spanish, French, and Portuguese and has lived in ten countries. Jacquelyn has done work for firms such as Boston Consulting Group and has worked with firms based in over ten countries in the fields of Real Estate, International Law, Expat Living, International Business, Forex Trading, and Travel. She has also volunteered her time and expertise at the Victims Rights Law Center based in Boston, MA.
Please leave your comments below. If you would like to subscribe to our newsletter, click here: https://tinyletter.com/barracuda-consulting. To purchase a full real estate report, or to access a complete suite of investment advisory services please contact us: https://www.barracuda-consulting.net/contact.
Jacquelyn Annete Garcia Vadnais is an Investment Consultant and field expert blogger for Barracuda Consulting.
Jacquelyn has a JD/ MBA from Suffolk University, an LL.M in International Law from the University of Miami, and a B.A. from the George Washington University in International Affairs with a Concentration in International Politics. Jacquelyn speaks English, Spanish, French, and Portuguese and has lived in ten countries. Jacquelyn has done work for firms such as Boston Consulting Group and has worked with firms based in over ten countries in the fields of Real Estate, International Law, Expat Living, International Business, Forex Trading, and Travel. She has also volunteered her time and expertise at the Victims Rights Law Center based in Boston, MA.
Please leave your comments below. If you would like to subscribe to our newsletter, click here: https://tinyletter.com/barracuda-consulting. To purchase a full real estate report, or to access a complete suite of investment advisory services please contact us: https://www.barracuda-consulting.net/contact.
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