Do you want to know about the effects of Coronavirus on the real estate market? Well, continue reading.
Just like every other industry, the real estate industry is affected by the COVID-19 pandemic. With new cases of Coronavirus being reported every day, it will likely take some time before things go back to normal. We estimate that the effects of the coronavirus on real estate will vary from one sector to another. Of course, this greatly depends on the duration of the lockdown.
Moreover, the impact of COVID-19 on the real estate markets will differ from region to region as well. For example, Florida, which is home to numerous sports venues, restaurants, cafes, bars, community centers, hotels, theme parks, casinos, etc, will feel the impact very differently from Texas.
Since social distancing has encouraged people to stay at home, every business or restaurant is now offering delivery or pick up services over dine in. In terms of residential real estate, there has been a notable dip in home listings. Given how we are heading toward a recession, buyers that were previously interested in purchasing a home are now wary of making any significant financial commitments, as well.
All of this is bound to drag down the real estate market.
For now, here is how the coronavirus has impacted:
Housing and Building
The builders have faced a drop in demand from their potential buyers, in the same way there has been a decline in the supply of materials mainly from China. As a result, builders are experiencing a drop in sales, and the lending conditions have also become tighter because of the non-conformity of mortgage loans.
Rental Apartments
The rental apartment industry is all geared up to deal with tenants who have lost their income and are unable to pay their rents. Right now, a large number of tenants have demanded forbearance, and this number will only increase going forward. However, in the long run, things might turn around, but it’s too early to make any conclusions right now.
For now, we can say that the biggest beneficiary in the current scenario will be the single-family-built-for-rent businesses because larger units are now being used for work-from-home purposes.
Industrial Warehouses
As discussed above, the supply chain is being affected in a very major way. Therefore, industrial warehouses are experiencing a short term negative impact. However, we may see a large impact in the future, to the point that online shopping will almost replace conventional shopping methods.
On the Bright Side
You must have heard the phrase “every dark cloud has a silver lining”. The same basic principle applies to the real estate sector. When this is over, the real estate investors will find themselves in a better position to pick up assets at lower prices and financing rates. These rates will be lower than we have ever seen in our lives.
