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Real Estate During COVID-19

How The Real Estate Market Is Reacting To COVID-19

The COVID-19 pandemic has been affecting multiple businesses and industries. Health and safety is obviously the world’s main concern, so make sure you’re continuing to stay informed, distant from others and are continuing to practice good hygiene. Among the multiple industries taking a hit due to coronavirus, the real estate industry is beginning to see how they might be affected within the coming months as quarantine/lockdown policies begin to be enforced.

According to the National Association of Realtors (NAR), the index of pending home sales has increased by nearly 3% in February of this year. This specific index measures real-estate transactions in America where a contract of sale was signed, but the sale has yet to be closed. 

The index itself helps provide agents with existing-home sales reports and what the coming months for their specific regional industries should expect. February’s national report in 2019 showed that pending signings were up by 9.4% nationally, indicating an obvious decrease in the buyer market, likely due to COVID-19 concerns. 

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“February’s pending sales figures show the housing market had been very healthy prior to the coronavirus-induced shutdown. The data does not capture the significant fallout from the pandemic or the measures taken to control the outbreak. Numbers in the coming weeks will show just how hard the housing market was hit, but I am optimistic that the upcoming stimulus package will lessen the economic damage and we may get a V-shaped robust recovery later in the year,” said Lawrence Yun, NAR’s chief economist.

This time last year, Yun also noted that on a month-to-month basis, pending sales were up in every region of the nation; not entirely uncommon but definitely not common for this time of year for the market in general. The West had an increase of 5%, the midwest 4.5%, the North 3%, and in the South, a mere .1%, still an increase.

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The fact that the market/pending sales reports were much higher this time last year may seem like it should cause some major economic concerns, however, this wouldn’t be the first time the real estate industry has had to cope with a worldwide health crisis or economic downfall. Before the coronavirus pandemic hit the U.S., the market was relatively stable. Supply was a little lower than what the nation is used to, however, the demand to buy was at a relatively high position.

According to NAR, in the winter of this year, America experienced an overall low interest rate environment that began in the summer of 2019. This caused an excess in sales to occur within the past few months, and also made buying a home more affordable. 

Of course, the concern now is how much the COVID-19 pandemic will reverse the real estate market and hinder America’s economy. Based on previous widespread illness outbreaks, the NAR is not too concerned with how the market will respond to this pandemic. In the past, the real estate industry has always rebounded back to where it was in areas of the country that have had their economies affected by health crisis’. It just obviously depends on the specific job/housing market.

“Housing, just like most other industries, suffered from the coronavirus crisis, but once this predicament is behind us and the habit of social distancing is respected, I’m encouraged there will be continued home transactions though with more virtual tours, electronic signatures, and external home appraisals. Many of the home sales that are likely to be missed during the first part of 2020 may simply be pushed into late summer and autumn parts of the year,” Yun said.

Yun went on to encourage any real estate clients who are currently involved in pending transactions to talk with their agency, and bank/financial advisers, about the best possible route to take for the time being. Many industries are trying to comply with the multiple ways the world is adjusting to living during a pandemic, the real estate industry included. So work with the professionals and they’ll work with you, according to Yun, eventually we will return to a place of normalcy, and the market will bounce back.

Home Renovations

Home Renovations Actually Worth The Investment

When it comes to renovating the home, the list of things to do can easily grow into a novel of projects ranging from fixing the porch light, to completely gutting the kitchen. However, when we find ourselves with enough money saved to finally check some of these projects off of our lists, it can be hard to prioritize what renovations are worth putting the time, effort, and money into, which ones can take a back seat, and which aren’t even worth it at all. 

Once it comes time to make this decision, interior designer/business owner Colleen Quinn says to prioritize the projects that will make your property universally more appealing. That way, if/when you have to sell your home, the changes you made will be well-received by a wide variety of people. 

“It is important to make investments that will be the best use of your money. We don’t want to put in custom details that are only for your specific use. Think about things that will be valued by a range of people,” Quinn said.

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According to a study conducted by the National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI), when it comes to the money you’d make back on your renovation investment, it really depends on the project. The study found that full kitchen renovations typically give homeowners a 59% return on the money they put in, and a full master bedroom would typically bring in a 50% return. 

The study also showed that projects that were considered to be much smaller scale, when compared to full room remodels, actually brought the most money back on the homeowners original investment. For example, installing hardwood floors brought back an average of 106% of whatever was originally put into it. Replacing the heating and cooling systems brought back 85%, and a full insulation upgrade in the home recouped about 84%.

So, when it comes to actually choosing what projects would be the biggest bang for your buck, it really depends on the reasoning behind the renovation itself. If the upgrades you’re making are with the intent to sell, then point your focus in the direction of all the main living spaces. The study found that the kitchen, bathrooms, and bedrooms are what potential buyers deem as the “most important spaces” when looking for a new home. Basically meaning that if the kitchen and bathrooms are updated, buyers are less likely to care if they would need to put their own money into other projects, such as the flooring or re-modelling the back deck. 

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Shane Steele is the Vice President of a California real estate investment company who also contributed to some of the reasoning behind the results of the study. She claimed that besides the main living spaces, the flow of the house is most important. The “flow” she’s discussing refers to the fixtures and finishes around the home that act as accents for the overall space. 

“Keep the fixtures and finishes somewhat neutral so they will be more appealing for multiple buyers. Add the flair with your decor that can be taken with you when you leave. While a neutral palate and a universal appeal should be the goal when renovating, retaining original details can help a home stand out. Where possible you should try to preserve the bones of the house. Any details like crown molding, arches, built-in shelves should stay, because there is demand for character,” she said. 

Renovating the home is truly a subjective experience based on personal desire and taste, however, it’s important to think about the future when adding all of your customization’s. You may not make all of your money back on your investment depending on the project and how well it’s executed, so make sure you’re working with a trusted and well-researched contractor. Ask other trusted individuals in your life, or in the business, about what projects will be most beneficial to both your life and your future, and get hammering!