Covid-19 has stirred up most aspects of our everyday lives. Unemployment is rising and businesses are shutting down. Has real estate investing been under the impact of it, as well?
As time passes, the effects of Covid-19 are becoming more and more noticeable. Before we could only speculate about consequences, but now some of them can already be seen. The effects have been devastating for many, especially those who invested in stock market of companies that are now being shut down. However, real estate investing remains merely intact.
Still, it goes without saying that Covid-19 has affected real estate investing, albeit on a much different way compared to other industries. Below are three ways this profession has been impacted by the ongoing state of the world.
1. Increase in Modern Technology
Real estate industry has never been the one to use many advantages of digital technology. However, this is beginning to change. Covid-19 has presented some challenges to the industry, which had to adapt. The best solution to social distancing regulations has been technology.
As the danger of Covid-19 lingers, it appears that this innovation will be here to stay. Home selling process has completely shifted towards using modern technology. At first, home viewings were arranged via video calls, which was a short-term solution. However, as time passes, it appears that agencies are spending more and more money to use every possible advantage of modern technology. People now use drone-supported imagery, many even use satellite viewings. Entire real estate investing portfolios are being promoted using various virtual tools!
2. Change in Demand
Before, the demand was pretty much stable and without too many changes over the year. Investing in multi-family properties was a certain way to earn profit, especially if the property was on an attractive location. However, this has changed, as it seems people have started to appreciate a new lifestyle.
Today, the demand for single-family houses in rural areas has increased. Everyone is looking for a way to move away from the city and the crowd. Also, people are now desiring bigger houses, as they started to spend more time inside. Buyers value indoor space more than before, and they would love to have a big garden. Safety is a priority, and rural areas are becoming more sought-after. Farmlands and houses outside of the city have increased in demand, and this trend is expected to last.
Senior homes are no longer as appealing, as buyers are demanding new standards when it comes to features such as HVAC or square footage per person. Baby boomers are not expected to move any time soon, and millennials want more modern homes that can help them stay safe in case of a new virus outbreak in the future.
3. Change in Behavior
Covid-19 pandemic has forced everyone and everything to change some behavioral patterns that used to be pretty standard. For example, houses and offices now have to be properly and regularly disinfected before anything else is done. Also, some housing standards are expected to change, which means everyone dealing with real estate investing will have to have a different approach when it comes to rehabbing homes.
Short-term leases are expected to become a thing of the past, as it’s no longer desired to move as often. Also, offices aren’t as desirable, as companies move towards remote work. However, Airbnb is expected to keep its popularity, as people who travel will no longer desire hotels and would want to have some more privacy.
On the other hand, number of long-term leases and tenants will likely increase, exactly because many people no longer want to move as often.
Changes That Were Expected But Aren’t Likely to Happen
There were many other changes that experts expected, but now we see they likely won’t happen. One of them is the economical aspect on the real estate industry. Home prices aren’t changing, despite the changes in the number of demands and supply. The market appears to be rather steady, and it doesn’t seem to change any time soon.
Rental properties are currently mostly dead, however this is slowly starting to increase, as tenants are coming back. Many investors are thinking about shifting towards flipping houses, but this isn’t recommended, as the change doesn’t seem to be long-lasting. As unemployment rises, many homeowners might lose their properties to foreclosure, which will once again increase the need for rent.
Commercial real estate was also expected to go through a crash, however, this doesn’t seem to be too dramatic. Sure, small offices are no longer sought-after, but bigger companies will still need to rent huge office spaces.
All in all, while some changes in real estate investing industry are here to stay, it seems like the market has proved its illiquidity once again. Real estate investing remains one of the most profitable branches of investing even during these hard times.