Everyone agrees that the COVID-19 outbreak is set to have a long lasting impact on the U.S. economy, and the housing market is no exception.
In a new report this week, Apartment List has outlined some of the long-term changes it thinks will affect real estate.
1.
Reduced mobility
The
report notes that people’s mobility will be much lower than it was
previously, before spiking.
“Geographic
mobility generally declines during downturns, when a lack of job
opportunities catalyze fewer long-distance moves across market or
housing upgrades,” the report said.
A
moratorium on evictions and foreclosures will also help to reduce
mobility, but analysts say they predict a spike in people moving home
once the outbreak ends.
“Many
upgrade and downgrade moves will be postponed rather than canceled,
creating a reshuffling of households throughout the recovery,” the
researchers note.
There
will also likely be a future wave of movement as people relocate
following the outbreak in search of jobs, or to be closer to their
family. Young people are also likely to want to flee the next to form
their own households.
2.
Less affordable homes on the market
Experts
say affordable rentals and homes for sale are likely to be impacted.
Both were in short supply even before the pandemic, and the situation
will get worse, they say.
“Fewer
people moving means fewer homes available,” the report noted. “With
both pandemic and policy keeping people in place, affordable units
will become even more rare through the 2020 peak season.”
Luxury
apartment inventory, on the other hand, may be abundant.
3.
Housing inequality will increase
Those in the higher-earner wage bracket will likely take advantage of lower borrowing costs and refinance in order to reduce their mortgage payments. But lower-income households will struggle with the sluggish economic and rising competition for the remaining low-cost homes available.
“As
shelter-in-place orders cover a growing share of the nation, those
who are able to work remotely are at a distinct economic advantage,”
the report said. “Unfortunately, a correlation between income and
the ability to work from home reveals that the lowest earners will be
hit hardest by these measures. Fifty-two percent of full-time workers
who earn more than $100,000 annually say they can work from home. But
only 15% of workers who earn less than $25,000 are able to work from
home.”
4. Sight-unseen purchases will grow
Experts
say they’re also expecting an increase in the number of people who
buy a new home sight-unseen.
“Many
apartment communities are already enabling virtual tours in response
to the pandemic, and many renters and owners alike may soon be
evaluating their next home through a tablet screen,” the report
found. “Mainstream adoption of sight-unseen moves will bring both
opportunities and challenges for the housing market.”
Source: realtybiznews.com