The pandemic saw an increase in home sales as the 30-year fixed mortgage dropped to less than three percent. Sales of newly-built homes reached their highest level in more than a decade despite being in the middle of a health crisis. The demand for new homes was so high that industry watchers noted a lower supply of homes at the end of the year.
While many homebuyers focused mainly on houses priced under $300,000, wealthier Americans opted to look for homes in vacation towns. This was particularly true for people who have remote work arrangements with their companies.
And with the end of the pandemic nearly in sight, people expect some changes in the real estate market in a post-pandemic world. Here are the changes that may happen in the industry.
Demand for Homes to Remain High
When the pandemic started, city dwellers were uneasy with living in a crowded city and moved to different suburbs around the country. Even before the pandemic started, urban areas already lost their appeal to many people. The pandemic simply caused home value to go down further as people started to move away from expensive housing markets like New York and San Francisco. The appeal of living in the city disappear as food and entertainment establishments closed to prevent the spread of the disease.
But once the pandemic ends, these places will regain their appeal, especially after home prices in these areas have gone down significantly. So, the demand for homes in these places will increase. Combining the falling home prices with low mortgage rates will see these cities become among the country’s most coveted properties after the end of the pandemic.
Home Value Will Increase
Despite the increasing rates of home loans, some people will continue to buy homes since they are confident of their financial standing. This is particularly true in places where home value has gone down significantly during the pandemic.
Once the pandemic ends, industry watchers will see an increase in home value in certain areas, especially in places that have become popular among home buyers during the health crisis. The recovering economy will spur the increasing home value, which will put off some people who do not have the budget or finances to buy these expensive homes.
Currently, the 30-year fixed mortgage rates are above the three percent level. When the economy fully recovers, industry watchers expect this to go beyond the four percent level. With this, home value may also increase, and people may opt to use their money for vacations to ease the stress of staying home during the pandemic.
Increase in Home Supply
The higher home prices will see homeowners taking advantage of the situation and sell their homes. But these are mainly homeowners who could not take advantage of the low mortgage rates during the pandemic. This will increase the supply of homes in the market, which suffered a shortage after people started buying homes due to the low mortgage rates.
On the other hand, homeowners who bought their homes when the mortgage rates were below the three percent level will likely keep their homes. They may only sell the homes if they have been in forbearance once it ends so that they can pay off any missed mortgage payments.
The Suburbs Will Have an Urban Feel
The pandemic saw an increase in the number of people with remote work arrangements with their companies. Due to this, many people moved to less-crowded places to reduce the risk of getting the virus. Others moved to the suburbs to look for bigger houses that increased their workspace. These homes also had bigger yards for their children.
With more people staying in the suburbs, small businesses in these places will recover faster than their counterparts in the city. Some businesses in the city may even relocate to the suburbs so that they can connect with their customers. Coffee shops and restaurants will open in these areas and give the suburbs an urban feel.
Increase in Suburban Market
The increasing appeal of the suburbs will also see its housing market expanding. This comes as many people prefer living in the suburbs compared to the city. The demand for homes with big yards will increase even after the end of the pandemic.
The appeal of the suburbs will also increase as more businesses relocate to these places to connect with their market. The remote work arrangement also contributed to many people’s move to the suburban areas since they do not need to commute to their workplace anymore.
The U.S. real estate market has gone through a lot of changes since the pandemic happened. These changes may continue even after everything will go back to normal.