5 Ways COVID-19 Is Affecting the Current Real Estate Market
Every part of the economy has been affected by the ongoing COVID-19 pandemic. The real estate market is no exception. Here are five ways that the pandemic has affected all participants in real estate, including real estate agents, buyers and sellers.
1. Hesitancy of Sellers
Sellers have been hesitant to put their homes on the market. This has led to a sharp drop in existing home inventory. The low supply has created a new challenge in the real estate market. At the same time, construction of new housing units dropped, which contributed to the low inventory problem. The United States overall has about a 30-day supply of homes for sale. A 90-day supply is considered optimal.
2. Fewer Searches and Queries From Buyers
In the spring, which is traditionally the busiest time of the year for home searches and open houses, buyers reduced their real estate activities. Online searches for homes dropped by about 40%. In the summer, buyer activity picked up again. At the end of the autumn and beginning of winter, queries dropped again, which is a normal pattern for the seasonality of home sales in the United States.
3. Reduced Showings
Real estate agents have had fewer requests to see homes. Fewer real estate agents have been available to do the showings, as interacting in a close environment puts them at risk of getting sick. Fewer homeowners have wanted agents to bring a lot of people through their homes, especially if they're still residing in the home while it's for sale.
4. Switch From In-person Open Houses to Virtual Tours
Real estate agents have made the switch from conducting in-person open houses and showings to offering private online tours and recorded virtual tours. Buyers can see the home's features and amenities, but it's more difficult for them to get a feel for the size of the space and how people would move in the space. A virtual tour also makes it difficult for a prospective buyer to see how the home's components work.
5. Higher Sales Prices
The low supply of homes for sale has resulted in an increase in sale prices. Some houses end up in bidding wars between buyers. Many buyers are getting priced out of the market. Because so many people have been able to work remotely, more people are willing to look at homes for sale in suburban and rural areas. Buyers are looking for larger homes, too. They need the space for a home office and the infrastructure for high-speed internet. Homebuyers with children are also looking for houses that have a convenient setup for kids to do remote learning with their school laptops. Buyers are also looking for luxurious amenities, and those amenities drive up the homes' sale prices.