4 Ways COVID Changed Real Estate
It goes without saying that COVID-19 has changed many aspects of the typical ways we live our lives. From online shopping to homeschooling to spending more time at home in general, the coronavirus pandemic has changed what we used to call “normal.”
One of the biggest industries impacted by the pandemic is the real estate industry. Let’s go over just four reasons how it has been affected.
Increase in buyers
One would think that due to a pandemic, the level of interest among those looking to move would be rather low; however, this has not been the case. According to the National Association of Realtors, there has been a 24.7% increase in the level of sales for previously owned homes. In fact, there is such a high demand for new homes among potential buyers that the market is struggling to meet it. This has resulted in homes being sold at premium prices.
Suburban life makes a comeback
One of the things real estate agents are seeing is an increasing demand from buyers to move out of the big city and into more suburban areas. The New York Times put it this way:
Between March 15 and April 28, moves from New York to Connecticut increased 74 percent over the period a year ago, according to FlatRate Moving. Moves to New Jersey saw a 38 percent jump, while Long Island was up 48 percent.
One way to explain this change is due to the desire to live in more open areas as opposed to being packed together in apartment complexes in the big city. In a new age of social distancing, the thought of living closer together with strangers is less appealing. Add to this the fact that more families are homeschooling their children while public schools navigate back to seated classes, and homes with more room to live, work, and play become even more appealing.
One of the ways the Federal Reserve has looked to improve the economy is by instituting lower interest rates for buying a home. This has resulted in an increase in buyer interest in the market. The average interest rate is below 3% for a 30-year fixed mortgage, according to Freddie Mac, which means more savings in the long term for potential buyers.
Supply vs. Demand
Although there are many positives for people looking to sell their home in a high-demand market, a big struggle for the real estate industry today is looking to meet those demands. Mark Fleming, chief economist for First American Financial, wrote the following: “You can’t buy what’s not for sale. The limited supply of existing homes for sale will continue to be an issue, and it will take builders years at a faster pace to build enough new supply to make up for the imbalance between supply and demand.”
Although there are many challenges that need to be met, one thing is clear: buying a home is increasingly more important in the way people adjust to their new ways of living in a COVID-19 world.
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