In March 2020, cases of COVID-19 started spreading in the United States. Virtually overnight, the bottom dropped out of the financial markets. Though Wall Street has recovered most of its losses, many industries have been hit hard by the pandemic and continue to struggle. Real estate is one of them. You might be wondering if this is a hiccup — or the sign of a long slump in the housing market. Read on to find out what the future has in store for the U.S. real estate market in the age of COVID-19.
Impact on Major U.S. Real Estate Markets
Throughout the United States, real estate markets have improved after a sharp decline in April:
In New York City, sales activity is down 42 percent over last June. However, all four boroughs — Manhattan, Queens, Brooklyn, and the Bronx — are reporting increased sales and real estate transactions. Houses prices increased slightly during this time period.
Texas fared better than New York at the end of Q2, with sales down just 9.9 percent and the median sales price up 2.9 percent throughout June 2019.
After experiencing the biggest slump since the Great Recession, California's real estate market came surging back in June. Sales climbed 42 percent in May but were still down 12.8 percent from June 2019.
Meanwhile, in Florida, single-family existing home sales actually increased 1.3 percent over June 2019. The Palm Coast Observer believes low-interest rates and the comfort of homeownership are contributing factors.
Low interest rates and buyer interest have helped to fuel the real estate market's recovery. A problem for homebuyers in many prime markets, however, is the lack of inventory. Sellers are simply not as keen to list their homes while the pandemic is still raging. This has caused declining inventory in markets like Texas and California, both of which were already tight.
The lack of inventory is a big part of the reason sales prices have not yet to come down. Prices are expected to moderate in 2021, though.
The Millennial Factor
Millennials could be another reason for the real estate market's rapid recovery. Strapped with student loan debt, and hurt by the Great Recession, this generation had been slow to become homeowners. By 2018, though, millennials became the single largest group in the market for a new home, making up 37 percent of all homebuyers.
If you're trying to sell your home right now, appealing to millennials is a smart move. What exactly is this group looking for?
Millennials prefer a home that is move-in ready over one that has potential. Typically, they do not want to invest time in renovations.
Moving into the right neighborhood is important to millennials. They are looking for walkability, nightlife, and good schools. They also want a property that gives them access to like-minded people. In fact, millennials value community more than a short work commute.
Having postponed starting families, many millennials are devoted pet parents and want an outdoor space for their dogs to run.
They are a tech-savvy bunch, attracted to smart security systems and anything else that allows them to use tech to make their daily lives easier.
Millennials like open plan living, preferring a shared common living space to more traditional separate rooms for living, food preparation, and dining.
Is Now a Good Time to Buy or Sell?
While this is a tough time to become a real estate agent, the prospects for homebuyers and sellers are surprisingly solid. Most analysts predict that it will take several years for the United States to recover from the economic stressors brought on by the COVID-19. That means low interest rates should continue to provide an incentive to homebuyers. Moreover, as sellers re-enter the market, home prices will moderate and could go lower.
What's the bottom line? Right now is a good time to sell your home, especially if you live in an area with low inventory. Sales prices are high, and buyer interest is back. On the other hand, if you are looking to buy a house, you might be better off waiting until 2021, when there is a greater likelihood of getting a bargain.