Despite the cautions everybody is taking to stay put as much as possible, people are buying real estate during the COVID-19 Pandemic.
Forbe’s contributor, Ryan Serhant, reported this week, that the need to move away from large metro areas that are totally shutdown because of COVID, is responsible for a suburban influx. While rich Americans are moving to their previously-labeled ‘vacation homes’ in the suburbs, middle-to-lower class Americans are simply searching for that extra room, or just a little more square-footage.
“There are people all over the country who are swooping in to buy real estate while prices are at rock bottom. With the market slow, the economy weak, and many sellers also eager to move into new places, buyers are getting fantastic deals on homes they might not have been able to afford just one year ago.”Serhant | Forbes.com
So why are so many people moving during the Pandemic? Serhant listed three factors that are contributing to this.
Dramatic Price-Drop in Real Estate
We have seen a market-shift where the buyer is now in control as sellers become anxious and nervous due to an inactive and low-balled market; Buyers are going into transactions with leverage like never before, and are experiencing large amounts of motivation to sell. Serhant used the New York City market to reference a 54% drop in sales—their largest in over 30-years.
“With low activity, desperate sellers, and an economic slump, the market shifted quickly and completely to the buyers’ favor. The median sales price in NYC dropped to just $1 million, 18 percent lower than the previous year’s stat for Manhattan.”Serhant | Forbes.com
Similarly, within Centennial’s Orange County foothold, the OC Register reports a 5.2% price declines, the biggest since 2009. So we see how the country is being affected from the waterfront properties of New York to those of Southern California, and everywhere in between.
The next two factors can be combined…
Home Value Realization/Home is Now Your Office
The Pandemic instilled a ‘new-normal’ within society. You are no longer considered an introvert for wanting to stay home. In fact, you may be reading this from your makeshift office in the dining room during your quick-ten. There are more reasons to keep us home, and due to the extended stays, people are realizing how their homes are essentially safe havens from the pandemic ridden world.
“It wasn’t just that people were “stuck” in their homes during COVID-19 and suddenly decided to upgrade to a bigger one. It was something deeper: Home became our “safe” place during a scary time. Quarantine was the greatest accidental PR campaign for the value of real estate that [Serhant] I’ve ever witnessed. Now, people have been inspired to invest more into their homes and push their budgets just a little bit further.”
Going to work is only a few steps away now, and trying to grade papers, finalize a spreadsheet, or devise the perfect e-mail while your kids are compromising your work space is far from being organized. The value of an extra room becomes that much more important to an individual.
“Once it became clear that work-from-home culture was here to stay (at least for the near future), people realized they need more space. Luckily for them, upgrading to an extra bedroom has never been more affordable than it is right now. And there’s another financial incentive for the work-from-home buyer: When your home is also your office, a portion of your mortgage can be claimed on your taxes as a home-office deduction.”
With new market lows across the board daily, the best prices and deals are still out there. Despite the dire straights the world finds itself in, it’s never been a better time to upgrade or find that new home.