COVID-19 is impacting every aspect of our lives, and the residential and commercial real estate industries have not been exempt. Social distancing, fear of the unknown, and economic recession are changing how we interact with each other and the way we do business. So, what are the biggest COVID-19 trends that will impact the real estate industry? Here are five of the most significant impacts that you can expect to see:
A Boost in Online Shopping
Unable to head out to the shops and pick up the groceries, household goods, or new pairs of socks that they need, people are turning to the internet for all their shopping needs. This boost in online shopping activity has had a significant impact on commercial real estate, with suppliers rushing to secure industrial warehouse space to cope with the demand. Coupled with the consumer expectation of quick delivery, some bigger companies need large-scale warehouses in the outskirts of the city and smaller inner-city logistics centers.
Fear of Face-to-Face Contact
The pandemic is scary, and most people are reacting with extreme caution, avoiding unnecessary face-to-face contact at all costs. While they may bend the rules to visit their family, they want to avoid meeting strangers unless necessary. This reluctance to interact puts a spanner in the works for open houses and catch-ups with a real estate agent.
The real estate industry has responded to this trend by offering virtual home tours, online live actions, and digital contract signing. Experts predict these industry changes will last even after the pandemic has passed.
More People Online
Since people have been stuck at home during the lockdown, internet hits have surged by 50-70%. People are working remotely, socializing online through platforms like Zoom, Skype and FaceTime, and streaming more entertainment than ever before.
Social media has been a growing trend in the real estate industry for some time, but after the pandemic outbreak, creating a robust online presence is more crucial than ever. People have more time to browse and read blog posts or explore listed properties on the internet – those realtors who leverage this will find themselves with a competitive advantage.
Short-Term Economic Caution
With the economy in recession and job losses high, even those with a steady income are expected to be mindful of their spending habits. This short-term caution is natural when the future is uncertain. It will lead to fewer residential listings, a smaller buyer pool, and lots of objections such as “we might just wait and see what happens” or “but we don’t know what will happen to interest rates!” Realtors may find themselves faced with longer lead-times when dealing with the prospects in their pipeline.
Long-Term Popularity of Tangible Assets
While there is likely to be slower movement on the residential real estate market, there could be an upside in the longer time. During times of crisis, people often turn to tangible assets. Faced with a fluctuating stock market, the feeling of security associated with owning a solid and real asset like a house or apartment is attractive.
There is no doubt that these are strange times and will irrevocably alter the outlook for most businesses, including the real estate industry. Agents must be prepared to pivot as the market changes and adapt to the new way of doing business. People will still need to buy houses, but the way they approach this major purchase will likely differ greatly from the pre-pandemic days.