The coronavirus pandemic has obviously flipped a lot of businesses and industries on their heads this year. One of the biggest being the real estate market in America. At the end of every year real estate experts take to MarketWatch and other reputable platforms to tell clients and investors their predictions for the new year in regards to mortgage and real estate trends in general. It’s safe to say that the predictions made at the end of 2019 likely didn’t hold up, but that doesn’t necessarily mean all the current trends are bad.
One of the biggest predictions was that mortgage rates would stable out and remain relatively the same throughout the country. Instead, once Covid-19 began infecting Americans in February, sellers began pulling their property listings and buyers began pulling out due to fears of infection. This led to a decrease in the average mortgage rates in the country, dropping nearly a whole percent when compared to last year. As of right now, real estate experts expect that percentage to continue to drop as time and the pandemic progresses.
One prediction that is proving to be true is the low inventory rates of homes to purchase in America. 2019 already saw a decrease in the amount of properties available for sale when compared to 2018, hence the prediction that this pattern would continue. As previously mentioned, many buyers and sellers have pulled out of potential listings due to health concerns; as a lot of real estate interactions need to happen in person. While it’s predicted that this pattern will continue, social distancing measures, facial coverings, and new technology that allows prospective buyers to take virtual tours of potential properties is keeping the industry alive.
Agents also predicted that a lack of affordability in properties would cause a lot of sellers to turn away from certain deals. This prediction is also proving to be true as home prices are currently increasing at a faster rate than there are buyers in the market. Again, the lack of buyers is mainly due to the pandemic, however, the prediction that this would occur shows that the industry is already in a tough spot when it comes to pricing. Lawrence Yun is a chief economist who recently spoke with MarketWatch about how he predicts this trend to turn around by the end of the pandemic.
“Home sales should pick up with the economy reopening. But, new home construction needs to robustly ramp up in order to meet rising housing demand. Otherwise, home prices will rise too fast and hinder first-time buyers, even at a time of record-low mortgage rates.”
Another prediction that unsurprisingly came true was an increase in 3D/virtual home tours. Even before the pandemic became a reality, agents were predicting back in 2019 that virtual property tours and real estate deals would become more popular this year. Initially, they based this prediction on out-of-state/country buyers who were making large moves to new places but didn’t want to wait to start viewing properties. It’s predicted that this new technology will only grow to be more popular as the pandemic continues, but also after it ends.
It’s likely that once the coronavirus is no longer an issue, many industries will continue out implementing the health and safety procedures they were forced into to curve the spread due to how safe it makes everyone feel in general. The real estate industry specifically has had to deal with many national, and international, emergencies that have hindered sales and business, so when it comes to recovery, like all industries, it’s going to take time.