How the coronavirus pandemic has impacted real estate

Real_Estate

How the coronavirus pandemic has impacted real estate


this coronavirus pandemic has definitely had a big effect on the real estate market, and the first part of it was very predictable, which is home sales went way, way down. But the surprise part is that sign contracts and future sales are going up and housing prices are going up faster than they were before the pandemic hit. So this is one of the most surprising turnaround that I have ever seen in covering real estate over a number of years now, obviously, you might have expected a sustained recession or depression in the single family home market. And indeed, for a couple of months it looked that way. The first time home buyer market is around 40% of the market. It goes as high as 45. Right now it's down to 40 a little bit below the long term average. There are more first time home buyers. There are even more existing home buyers, but they're both doing well. Believe it or not, the problem for first time Homebuyers is that's where the biggest runups and prices have happened. That's where you have the least new construction in the marketplace because land prices have gone up so much in these markets, they simply can't make money. A building, low priced homes and a lot of areas, whether it's even in the low costs parts of the country like Jacksonville or Charlotte or Pittsburgh or some of these Midwestern cities, Renting has been the big winner in recent years. You've got a lot of millennials, hundreds of thousands, millions of millennials who did not get into the first time buyer market and rented instead. And they rented both apartments, and they also added single family homes. And that market really took off. But it took away from the fire market. What that really says is that compared to prices, rents were very competitive. Now we're seeing a shift for a couple of reasons. One is that these low interest rates have brought the cost of buying more in line with renting. And the second is that people simply as a lifestyle change, want to leave their apartments that have more space. They want the backyard. They want to get out of a very dense area. Real estate investing is very problematic right now, because the prices are so high and they really have nowhere to go. But over the very long term. Probably decline. Rates aren't going to go below 3.1% but they could go up to 5% which is where they were at the end of 2018. And that's typically where they are well above that. In fact, on the average. So if things go back to average, you're going to have a decline. So it's not really a great place to invest. It's even worse, probably, uh, in the commercial. Real estate markets in the rental markets for for for offices were seeing obviously a lot of big companies leaving their office space and downsizing in a big way because of this lifestyle change, because often there under financial stress, because their workers are much more used to work and get home. If you're going to buy a single family home and you have a 30 year mortgage, it might turn out pretty pretty well for you because you locked in that very low rate. So should you buy a house an hour or not? Well, houses are very expensive relative to rents relative to the prices that people were paying five years ago. Probably your income hasn't gone up as fast as the houses in your area. But on the other hand, you can get a mortgage that 3% versus 4% two years ago, a year and a half ago. So if you can lock in that mortgage, it may be a pretty good time. And also, if you're in certain markets where the prices have not gone up, could be Memphis, say, or parts of Jacksonville or ST Louis. They're up, but they're still relatively affordable. It's even better, okay?