There’s no doubt that the post-coronavirus world is going to be a lot different, but what does that mean for real estate? Are we ready for the ‘new normal?’
Photo By: Anthony Wilder Design/Build, Inc.
In just a few months, the coronavirus pandemic has altered the lives of Americans, our businesses, economy, and morale. As we go forward, it’s going to be challenging trying to get back to some semblance of normal. But, what does that look like? What will the ‘new normal’ look for the real estate market and how agents conduct business? Let’s take a look at some of the ways we could see how real estate might change in a post-coronavirus world.
Unemployment is putting the real estate market in distress
There are plenty of reasons why people move to big cities, be it for an opportunity, employment, or a fast-paced lifestyle. However in light of the pandemic, these large cities, with their dense population, are experiencing higher unemployment rates as local businesses shut down. Las Vegas’ unemployment increased by 2.6% between March 2019 (4.2%) and March 2020 (6.8%), for example. Since people are losing their jobs without real relief from the federal government, real estate sales are down, homes are being foreclosed on, and rents aren’t being paid. As a result of this, people are likely to jump ship and relocate to recession-resistant cities like Bay City, Michigan, Pueblo, Colorado, and Pittsburgh, Pennsylvania.
Photo By: Justin Doyle Homes
Agents may use virtual tours and open houses more often
Typically when we think about real estate online, we think of property listing sites like Zillow or Trulia. When we see a house we like, we ask our real estate agent to make an appointment so we can have a walk-through. However, social distancing and stay-at-home orders have made that nearly impossible. That’s why many realtors are using 3D virtual tours and host live walk-throughs via FaceTime or Zoom. By doing virtual tours, person-to-person contact is reduced significantly. Buyers can look around the property without actually being there. Sellers don’t have to worry about potential buyers coming into their space and possibly spreading the virus.
Photo By: Vero Beach Magazine
Interest rates for mortgages may continue to drop
At the moment, Freddie Mac reports the average mortgage interest rate is 3.28% but that doesn’t mean they could go even lower! Unfortunately, while this would be a great time to take advantage of the incredibly low rates, many mortgage companies have changed their requirements for approval. For example, JPMorgan Chase has increased the minimum requirements, which means borrowers will need to have a 700 and above FICO credit score and 20% down payment. When you combine this with the fact that people have lost their jobs, there’s little economic relief, and bills will get further behind… People’s credit is going to suffer, therefore making it a lot harder to be approved for any type of mortgage.
Home certifications, inspections, and appraisals are modified
To continue along the home sale process, homeowners will need to get a variety of certifications, inspections, and so forth. Although the country is slowly starting to open back up, some municipalities are still keeping their doors closed. This means that some of these things are being held up. Some places can have these certificates waivered, but that could come back to bite you in the rear. The coronavirus is taking everything we thought was normal and is changing it in some pretty big ways. Many businesses, especially real estate, rely on front-facing interactions — the person-to-person engagement to get the deal completed. And, while we want to hope that our lives will get back to the normal we’re used to, we don’t truly know what’s in store for us. All we know is that technology is going to be playing a big role, for better or worse.