The U.S real estate sector has shrugged off the shocks triggered by the COVID-19 pandemic to cap one of the finest runs amid a challenging macro environment. Contrary to expectations, the pandemic has fueled activities in the sector as health concernstriggered the digitization of the home buying process.
Pandemic Triggered Home Buying
As remote-working took over, amid the pandemic, home buying in some areas especially the suburbs edged higher. Demand for houses in vacation towns edged higher, as well, as wealthier Americans opted to purchase second homes to run away from big cities crumbling amid the pandemic.
Even though the pandemic helped fuel activities in the housing market, home sales are not expected to cool off with the pandemic’s easing. While there were concerns that COVID-19 vaccine distribution will have a negative impact on the sector, that is not expected to be the case.
Multi-Family Homes Outlook
Healthy home sales should be expected post-pandemic, according to Ali Wolf, the chief economist at Housing market research firm Zonda. While the most expensive housing markets faltered amid the pandemic, they are also expected to bounce back post-pandemic.
In New York, for instance, housing prices have fallen significantly to the extent of prompting home buyers and renters to consider the state once more. The allure of buying highly discounted prime property in big cities such as New York is one that continues to excite most home buyers.
For most people, home sales in the market, such as New York, had stagnated because the houses had become too expensive. With the prices having dropped significantly, there is hope that home sales could inch even higher post the pandemic.
Falling home prices combined with low mortgage rates are some of the factors likely to continue supporting homes sales come 2021. A thriving tech industry is another factor that should continue to support home sales going forward. Demand for housing in California is expected to remain high as more startups crop up, requiring employees, as well as places for them to stay.
Smaller cities in the south and the Sun Belt are also expected to benefit as remote working becomes the new norm post-pandemic. Some big companies such as Twitter have suggested that they will let staffers work from home indefinitely.
Should more companies allow people to work from home and then expect demand for housing in less populated cities with warmer climates to edge higher. A Shift to a more flexible working environment should enable markets with affordable housing, a good lifestyle, and a favorable climate to thrive.
Distress Over Commercial Real Estate
While the outlook for multifamily homes looks bullish, the same cannot be said about commercial real estate properties. The big problem for U.S commercial real estate is just but starting; according to Pat Jackson of Sabal Capital Partners, commercial properties’ outlook is not good.
Commercial properties are under immense pressure amid massive business shut down in big cities owing to the COVID-19 pandemic. A resurging COVID-19 pandemic continues to stock fears of a V-shaped economy recovery highly needed to support the sector. The fact that most of the properties are marred in massive debts as commercial mortgage-backed securities all but continues to arouse concerns of the economy failing to bounce back from the pandemic.