Desperate to escape their cramped apartments, city dwellers who are working from home have taken to renting vacation properties for extended periods. The New York Times reports that long-term summer bookings for rural and oceanside vacation properties have increased considerably and the trend is likely to continue for a good while yet.
Much to the relief of homeowners, the general consensus among those in the know is that prices are poised to remain stable with sharp falls improbable. “It is unlikely we’ll see a significant drop in home prices and we’ve seen buyer demand remaining relatively strong despite the pandemic,” says Nick Bailey, chief customer officer at RE/MAX. However, strategists for UBS Wealth Management Americas said that housing markets reliant on tourism and leisure are likely to be affected as demand falls, and that price drops may also strike the most unaffordable parts of the country.
Most tenants can be rest-assured their rents won't be hiked up in the foreseeable future, though some who may be expecting a drop in rental prices may be disappointed. The average rent fell by 0.2% April to May but these small changes are likely to even out over the year. Even with record unemployment levels, rent payment in May came in at 80% which could be due to financial assistance checks kicking in to provide some relief. Long term, competition for cheaper rental accommodation may drive a rise for Class B and C homes.
According to chief customer officer at RE/MAX, Nick Bailey there will be a wave of first and second-time buyers looking to get on or ahead on the property ladder. He said: “Generational demographics are one of several key tailwinds for housing – the population is increasing and the largest age group, millennials, are in their peak home-buying years so the demand side remains strong.”
Buyers, by and large, will be less willing to pay over the odds and sellers will have to be careful not to alienate interested parties by expecting them to present offers well in excess of the asking price. Billy Rose, the founder and president of luxe LA brokerage The Agency, told Forbes that this is not the time to be overly ambitious on price: "Sellers also need to be mindful that now is not the time to be trying to drive a hard bargain. Don’t scare buyers off. Be accommodating if you want to sell.”
A key factor that should keep the US housing market buoyant through 2020 is record low interest rates – and therefore cheap mortgages. The Mortgage Reports anticipates rates could even drop below 3% by July, and following its survey of major housing authorities such as Fannie Mae and Freddie Mac, the organisation believes rates will average around 3.2% for the remainder of the year.
According to some experts, we could be looking at a real estate frenzy once lockdown ends. This could occur as soon as July but may be delayed until the fall, that's if there isn't a second wave of course. “Likely, much of the spring selling season has simply been deferred, and we anticipate the velocity of transactions to increase in the coming weeks and months,” says Nick Bailey. This view is supported by other experts including Mashvisor economist Daniela Andreevska and Compass realtor Sarah Maguire.
Urban tiny living has been all the rage but the Covid-19 pandemic could put an end to the trend. With so many of us confined to our homes during lockdown, and working from home likely to become increasingly commonplace, people will be looking to size up rather than down. “I think that the desire for larger apartments will come back into style,” says Compass broker Ian Slater. “The concept of a micro-apartment... will become a very challenged notion.”
Likewise, prolonged shelter-in-place orders across the country mean buyers will be craving homes with outside space, be it a yard, balcony, or roof terrace. “Being stuck inside, I think people may realise what is important to them in a home and in their space,” says Brown Harris Stevens agent Lisa Lippmann. “Outdoor space will become more important.” Joanne Breen, the president of the Connecticut Association of Realtors, agrees. “From what I'm hearing... [buyers] want outside space.”
A slew of experts predict a surge in the number of people working from home in the future and the Covid-19 pandemic has served to accelerate this trend. As might be expected, many buyers will lust after a tricked-out home office. “I’m betting that home offices which are fitted out for a digital work existence will become the newest ‘must have’ amenity,” says Billy Rose. “Imagine ‘his and her’ home offices built ready for the now ubiquitous Zoom conference, replete with green screen for your virtual background of choice.”
Presumably, as a result of wishing to maintain social distancing and the desire for more spacious properties, real estate agents are finding that buyers are increasingly looking to relocate to detached homes. According to Joanne Breen, home hunters “want more space between houses”.
Markets viewed as being tough will likely see a resurgence say realtors including Halstead's Tammy Felenstein and Redfin's Glenn Kelman. They include out-of-the-way neighbourhoods in smaller cities and towns that may lack downtown walkability. These areas have a number of distinct advantages people will be seeking out in the post-coronavirus world ranging from more affordable house prices to sprawling green spaces and a strong sense of community.
For those who want to stay in a big city, townhouses will be more sought-after compared to homes in large apartment blocks. “I certainly think this is good for townhouse living because you don’t have the same issues you have in an apartment building such as sharing an elevator, not having access to your gym, and you have private outdoor space,” says Lisa Lippman.
Modern technology has been a godsend during the lockdown and the Covid-19 pandemic will likely make virtual property tours far more prevalent. Realtors around the country are already increasing the number of virtual tours they offer. Needless to say, companies like virtual tour and 3D camera firm Matterport are doing a roaring trade.
Sellers and buyers have managed to get around stay-at-home and social distancing regulations by conducting the home buying process remotely and these practices are expected to remain in place for some time yet. “Relatively few steps in the process of buying or selling a residence require... in-person interaction or exchange of documents, so we’re likely to see many of the virtual homebuying and selling processes remain,” says Nick Bailey.
A multitude of real estate websites have paused days-on-market counters due to the lull in home sales mainly in order to encourage buyers who may be less inclined to make an offer on a property that appears to have been languishing on the market for an extended period of time. This is likely to continue for the foreseeable future.
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