U.S Real Estate Sector In Contraction Mode, Digitization Crucial To Recovery

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Real estate was the catalyst behind the 2009 financial crisis. Fast forward, the global economy is yet again on edge owing to the disruptions triggered by the COVID-19 pandemic. The U.S Real estate has been one of the hardest hit, with the epidemic, suffering its most significant contraction in recent years in the first half of the year.

U.S Real Estate Contraction

According to research firm PricewaterhouseCoopers, the total value of real estate deals contracted 50% in the first half of the year hurt by businesses’ shutdown and operations across the country. The total number of transactions was also down by more than half compared to the second half of 2019.

The hospitality industry was the biggest driver of contraction in the U.S real estate industry. Deal activity in the sector was down 77% as the travel industry came to a standstill following the closure of borders and travel activities worldwide. Real estate deals in the hospitality industry were down 53%. Likewise, the total deal value for apartment complexes and offices was down by more than half compared to the second half of 2019.

The decline in deal activity, as well as the value of deals in the real estate industry, could be attributed to, among other things, tighter credit terms imposed by lenders. Faced with economic uncertainty and a spike in unemployment levels, lenders refrained from offering credit, waiting to see if the situation would improve.

Recovery Catalysts

Amid the contraction, PwC in a research report indicates that activity in the real estate activity will remain subdued in the third quarter but improve significantly in the fourth quarter. Deals are expected to pick up in the fourth quarter as economic activity improves, and businesses come back online. However, it is a rush by investors to pick up properties that are distressed in the short term likely to fuel activity and transaction in the embattled sector.

Technology could also play a role in reinvigorating activity in the sector. Digitization of activities and operations in the real estate industry has gained traction in recent years, making it easy for people to get their ideal properties with ease.

Real Estate Digitation

Lev is one such platform that is changing the way people go about business in the vast real estate industry. The brainchild of Yaakov Zar, a tech entrepreneur, the platform leverages human and artificial intelligence with a database of over 10,000 lenders, making it easy for borrowers to source financing without invoking the help of debt broker.

India is another country struggling with the COVID-19 shocks that have taken a toll on the economy as well as the real estate industry. Just as is the case in the case in the U.S, digitization also promises to improve buyers’ and sellers’ prospects in the country’s robust real estate industry.

Home247 is one such platform that is changing the way home buyers and sellers go about their business in the real estate industry. The platform comes with a ‘Book a Home from Home’ offering that allows people to search, choose, and complete the purchase of their favorite property online. The platform seeks to streamline all activities in the country’s unorganized real estate industry.

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