The ongoing pandemic has had a vast impact on nearly every industry, and the housing market is no exception. As stay-at-home orders were enacted and financial insecurity loomed large for many in early 2020, the number of both buyers and sellers dwindled. Fortunately, the market bounced back as city dwellers sought more affordable suburban properties for their new home offices, and house prices have continued to rise ever since.
Many are wondering what implications these trends have for the winter housing market. Members of Forbes Real Estate Council offer their predictions for the season.
1. Multifamily Investment Interest Will Remain High
With regard to multifamily real estate investments, the pandemic has seemingly not affected investor interest nor have we seen downward pressure on pricing. We feel that there are many lagging indicators from the pandemic that have not yet surfaced in the multifamily investment sector. The CARES act and low treasury rates have kept CAP rates compressed and multifamily investment interest high.
2. Home Spaces Will Be More Important Than Ever
The pandemic has drawn everyone closer to home. Spaces and environments inside the home are far more important than in years past. A quiet workspace, lots of light and outdoor amenities have all become important assets to residential properties. This has been initiated by the pandemic and I anticipate these will be valuable assets in residences for years to come.
3. The Housing Market Will Continue To Be Strong
The housing market has been and continues to be strong. This is due to lack of inventory, the new Covid value of “home “(which is now the office, gym, school and house of worship) and low interest rates. I do not see any signs of a slowing down of the housing market for spring or summer.
4. High-Value Homes Will Have Fewer Buyers
For larger-value homes, the pandemic will, for the most part, be detrimental because there are fewer buyers for these homes. Most of these purchases are relocations or are people who have discretionary income to spend. Given the state of the economy, buyers are likely to pause their large scale purchases, including housing. The good news is the smaller homes will continue to do well due to interest rates.
5. Sellers May Be Wary Of Listing Their Homes
Some winter housing markets have slowed to a crawl due to the normal seasonal slowdown. Some have slowed even further due to Covid fears keeping would-be sellers from listing their homes.
6. Northeast Residents Will Continue To Migrate To Florida
The winter weather will accelerate existing trends in the housing market. The pandemic created a massive migration from the Northeast to South Florida. Affluent buyers have been flocking to Florida for a number of reasons including the favorable climate, tax breaks and desirable lifestyle. Owners’ rep firms will play an integral role in both the residential and commercial sectors.
7. Another Construction Halt May Be Inevitable In Certain Regions
Another construction halt is inevitable in many areas of the U.S. due to Covid-19. As a result, it is important to take steps now to prepare not only for a shutdown but also to resume work when restrictions are lifted. From job safety and worker retention to site planning, a well-executed plan will help developers and construction managers not only survive but thrive in this challenging environment.
8. Desirable Buyer Locations Will Shift
Buyers will be thinking differently about where they want to live based on where they feel will be the safest and most productive. They may not need to report to the office in the city center, living and working instead in a community outside of the city where schools, restaurants and shared workspaces still remain open.
9. Low Inventory Will Continue Causing Bidding Wars
There’s no sign of a buyer slow down yet! Interest rates are low, which is driving buyers to take advantage of this prime time to purchase. Lower market inventory than previous years is causing bidding wars on desirable homes.
10. Secondary And Tertiary Markets Will Skyrocket
I believe that the housing market in the suburbs, especially in the secondary and tertiary markets, will skyrocket as people leave city centers. Buyers are opting for more space and maximizing their dollars as the work-from-home situation appears to be here to stay. I think cities may see slight stabilization in home prices as the suburbs see higher demand and an increase in prices.
11. The Leasing Market Will Continue To Have Lower Occupancy
For apartments and leasing, many markets experienced delayed busy seasons, which made the fall season and the transition into winter busier than in years past. Still, we will see more discounts offered as buildings are experiencing lower-than-average occupancy.
12. Virtual Tours Will Become A Family Home Buying Experience
This winter will bring more virtual tours, which may translate to more buyers due to the historically low interest rates and our new ways of life. The ability to tour homes from the comfort of our homes with more family members will make the home buying experience more pleasurable. The need for more space for growing families and home offices may result in a hot winter for American suburban homes.
13. Covid-Inspired Buyers Will Balance The Normal Winter Lull
On the purchase side, I expect that many buyers driven by “Covid flight” will counterbalance the normal winter lull so that there will be a strong winter market. On the rental side, as government subsidies and eviction moratoriums expire this winter, unfortunately, I expect a lot more pain and distress for tenants who can’t pay and for property owners who can’t withstand the rental loss.
14. Traditional Seasonal Patterns Will Be Disrupted
Seasonal buying and renting patterns have completely shifted. This is not a result of cold weather, but major shifts in normal corporate hiring patterns, college graduations and virtual/flexible school enrollments for families.