Despite the coronavirus pandemic, countries such as the UK and USA are seeing positive movements in the real estate sector. The UK is currently experiencing a small housing market boom, as government incentives has led to increased property demand. All of which is positive news for the housing sector and the economy. According to Forbes, historically low interest rates and people moving out of the big cities has helped the single-family housing market in the US. These low rates have meant that people are more easily able to afford a home. Despite concern that the housing market would crash, it seems that for many realtors this is not yet the case.
Yet the pandemic has had an effect, lockdown procedures have caused many businesses to realize that remote working is a plausible business venture. With some companies asking employees to work from home indefinitely or even giving the option to do so permanently, more and more people are looking to move out of the big cities or simply access homes with more space, to accommodate home working. This means that there are some sections of real estate, the ‘in demand’ locations are not to the same as they were before the pandemic.
The pandemic has meant that many cities and countries have had to go into one or several lockdowns, and many people are working from home. Often a person’s settlement area is dictated not only by square footage and community, but also by its distance from work, schools, and cultural areas. When it comes to the workplace, many people have to live in or near cities in order to easily get to work. However, now many employees can work from anywhere, proximity to a physical workplace may not be as big a factor. Some even suggest that as the coronavirus spread quite quickly within cities, more people are looking to relocate to suburban areas anyway.
In terms of the city, Forbes predicted, ‘the effect we can predict is that rents in large cities, which have historically been extremely high, will go down as inventory increases. For those who are staying in the big cities, co-living, which had become popular, may see waning interest.’ This may also have a knock-on effect to commercial real estate, as businesses look to downsize, if enough of their employees start to work remotely. Therefore, office spaces may be predominantly for meetings and companies may want to renegotiate leases or move to cheaper and smaller premises.
Further as many people have learned that they can work from home, some even finding it more productive, office space within the home may quickly become a desired attribute, and typically, bigger homes lie outside of city areas. The Wall Street Journal reported, “a recent Zillow survey found remote workers could be compelled to move if a home offered them things like dedicated office space or a less dense area with fewer neighbors. Zillow’s data shows home values have held up better in suburban than urban areas in recent months.” This concurs with the New York Times which wrote: ‘For years, values in the so-called back-country areas — characterized by expansive homes on multiple-acre lots — have dropped off sharply, as buyer preferences shifted to in-town locations and more-manageable yard sizes. Inventory piled up. But with more buyers now looking for large outdoor spaces and swimming pools to help them ride out the pandemic, the back country is feeling the love again.’
However, this does not necessarily mean that the real estate market has changed completely, many people still are not able to buy homes. In the UK, whilst some are looking to buy homes in more rural or idyllic locations outside of the cities, it is still predominately the wealthier portions of the country that are relocating. Many people have lost their jobs or suffered financial strain during the pandemic, and therefore are not able to buy new homes. Further, many industries are either unable to work remotely or will not make that move. The US market is demonstrating a similar pattern, Bloomberg reported, “The uncertainty and economic chaos sown by coronavirus is balanced out by record-low interest rates, a factor that’s boosted mortgage applications. Those rates are likely to only benefit those with pristine credit, as mortgage lenders tighten restrictions. Only 50% of Americans believe it’s a good time to buy a home, according to a recent Gallup poll.”
However, the change in location is not limited to buying a new home. As many people are still working from home, some are choosing to take vacations whilst working – whether relocating with their laptop to a holiday destination or even staying with a loved one. As the Wall Street Journal article pointed out, remote working can be done on holiday, ‘Airbnb, for example, is now touting its ability to enable users to work from anywhere, no matter how remote, after years of inviting its guests to “live like a local.”’