As one of the largest markets in the world, the real estate industry has been heavily influenced by the coronavirus pandemic. However, things might not be quite as bad as they seem. Unlike the hospitality industry, real estate has not shut down entirely. Since people need housing now more than ever, there is still hope for recovery.
Statistics for the past few months show that there has been a little bit of a downturn, with 15.7 percent less homes than usual being sold in March and 24 percent less mortgages being applied for. This decline has led to a corresponding drop in interest rates and house prices. Most real estate analysts agree there will be some market contraction in the short term, with less properties available and less money being invested in the upcoming months.
However, some experts think that things will pick back up quite rapidly. Summer is often the busiest time of year, as buyers often want to find a new house to move into right after the school year ends. Many people stuck at home for months are starting to rethink their current living situation, leading to some renewed interest in the housing market. Thanks to new technological developments, buying online is easier than ever. Therefore, the more optimistic predictions have the real estate market recovering by late summer or early fall.
Though things look fairly promising for residential real estate, the outlook is not quite as bright for commercial properties. Retail and restaurants are one of the areas hardest hit by the coronavirus, with many unable to make rent or purchase new properties due to their lack of income. Many current developments are still underway, but banks and realtors have noticed that future development plans have been put on hold in many places.
Until the economic uncertainty ends, it will be impossible for commercial real estate to continue moving forward. Since commercial and residential real estate are closely linked, this has some experts thinking it may take until 2021 for the market to recover entirely. In this worst case scenario, there may be a small drop in property values, longer times on the market for housing, and less development. However, those who have the funds to remain patient and hold onto their investments will most likely end up seeing positive results eventually.