As nearly every existing branch of the global economy, the real estate industry was heavily influenced by COVID-19. Some of the consequences were obvious, but some of them turned out to be quite surprising to the buyers, sellers, and even experienced real estate agents.
For nearly half of the year of the pandemic span, the dynamics of supply and demand on the real estate market have fluctuated, with emerging real estate industry trends replacing one another, from virtual tours to advanced real estate software development. Even past this time, the full picture of the future of the real estate is yet uncertain. However, some observations and statistics have proved a few real estate industry trends that will reshape the market in the long run.
5 real estate industry trends that emerged during the COVID-19 pandemic
Demand is higher than supply
At the beginning of the pandemic, everything froze in waiting, and the real estate market wasn’t an exception. In May, 80% of house buyers hindered their searching process, either postponing it or canceling altogether, according to the study by OJO Labs. More than half of respondents stated either general uncertainty or hardships in their financial situation due to furlough or shortage as a key reason for stopping the process of buying a house. Only 20% of buyers were more eager to purchase with the reasoning of lower mortgage interest rates and hope for decreasing prices at the market.
Apparently, in mid-summer, the picture has changed. Who would have thought that in the middle of a pandemic, with last summer months resulting in tripling the cases around the country, there would be more people willing to buy a house than to sell it?
The percentage of buyers wanting to buy real estate has increased, while home listings dropped 14% in July compared to the previous year. This has resulted in demand outgrowing the supply, so the hope for plunging home prices has vanished without a trace.
The interesting logic behind the home sellers haltering their offerings is that the majority has a strong opinion that nobody buys property during the pandemic, and the prices are falling. When in fact, it turned out to be the greatest misconception in the real estate market in the times of COVID-19. There are more buyers than sellers, and the real estate agents are closing deals at the premium prices. Ironically, it can be the best moment for home sellers to make a great sale at this unpredictable time.
Moving out of the urban area
Among those trying to acquire real estate, there is a very clear leaning towards buying a property in rural and suburban areas. In August, the median price for a house in rural areas has jumped 11.3% and 9.2% responsively in suburban locations. Real estate agencies admitted the interest to remote areas started to skyrocket in late spring. While locked at home with an unbearable feeling of uncertainty, people starter reconsidering the way they live, with precise attention to the place they live in and the experience they’re getting from it.
After spending a couple of months almost imprisoned in the apartment where you feel uncomfortable or limited, rethinking comes naturally. Those who can afford are moving out of the city to a larger house in the remote location. Mostly, these are remote workers with families that eventually needed more indoor and outdoor space for a comfortable, new life.
For many, the pandemic has permanent effects rather than temporary. For people who have not attached to their physical workspace anymore, it makes no sense to stay in the densely populated city, spend hours on the commute, and pay for living in the urban area. All of a sudden, the house ‘wants’ very quickly became ‘needs’ for many people because their home had to become an all-in-one, multi-purpose entity.
Though, many real estate agents think this won’t be a central tendency in buyer preferences: after all, many workers will eventually return to offices as a necessity of their job, and others are just not ready to give up an urban lifestyle, where you can enjoy restaurants, social events and other activities that are by the hand when you live in the city.
Larger, more comfortable houses
Another thing the pandemic has put pressure on is people’s wants in terms of housing. While in the normal reality you would spend years daydreaming about your perfect home and always postponing the renovation or property purchase, the lockdown pretty much sped up the process. People have realized that if there is a time for a change, it is right now.
So, the buyers that were confident to purchase real estate were looking for big, spare houses with gardens or outdoor space, a place for the office, extra bedrooms, and even a home gym. Investing in practical and functional planning, attractive and long-living materials is a particular feature of house-hunting during the quarantine. Making their house a comfortable, accessible, complement sanctuary is what buyers want right now. If it is a place where they have to spend the majority of their time now, it has to be a pleasant one.
At the same time, homeowners want to maintain privacy and escape from routine in their own homes. That’s why home office space has to resemble a working place, where they can concentrate on their job, while gardens, pools, and terraces need to serve as a separate rest place from house chores and work.
Decreasing mortgage interest rates
The real estate prices have increased, and we’re still in the middle of a pandemic. Why, under such circumstances, there is such a high demand for houses? There is a driving force fueling the rush amid buyers: ridiculously low mortgage interest rates.
According to the Mortgage Bankers Association, mortgage applications rates are 33% up compared to the previous year. It was a strategic advance of the Federal Reserve to boost economic growth, which seemed to be successful. From a market average of 6-7%, the median 30-year fixed mortgage interest rate fell to a record-low 3%. This not only stimulates the urge to purchase real estate among homebuyers but results in significant savings in the long run, even with the increasing property prices.
Investing in real estate software development
The pandemic was a defining moment for real estate companies and agents, not just buyers and sellers. The way they approach showings and sales has changed in many ways. In the most strict phases of lockdown, real estate agents could not arrange real-life property tours, which seemed to be a bullet-proof obstacle to the normal selling process. Buying a house is a complex and very emotional process: people want to feel it, being in their future house. They imagine their life here, and a lot in the selection process comes intuitively. But buyers were deprived of this now-luxury during the pandemic, and real estate companies had to invent and use every possible way to keep the sales wheel spinning.
Here comes an advanced real estate software development, encompassing a wide range of digitally-enabled services for real estate websites. One such solution is virtual tours. It may sound crazy, but buying a house through Facetime has become a new reality. Surely, investing in a proper real estate website development and adding a decent feature of 360-degree video tours would be a more promising option to close a deal.
Real estate software development was already drilling the real estate industry before COVID-19, and now it has proved to be a necessity. Some go as far as using augmented reality tools to make the showings as real as possible, and others are using omnichannel sales approaches to reach their customers. This as well spreads on the sales process: more automated services for matching buyers and houses according to their specific requirements will be at the forefront of the future real estate market.
As customers and homeowners will adjust to the digital innovations at the market, the players that utilize a different approach with the robust real estate software will be on top of the game.
Ultimately, the real estate industry dynamic remains very positive for the economy despite crisis time. Though the outcomes and consequences of the COVID-19 on the real estate market cannot be completely forecasted, several trends will impact it in the long run. Companies that are flexible to react and adjust to the new conditions while adapting real estate software will be topping the curve.