The dreaded pandemic is here in the name of COVID-19. The entire world is reeling under its effects. Right now, the nation is focused on measures to control the pandemic. The economy has already taken a beating. 3-week long lockdown in many nations and yet we are uncertain of when the virus will be gone completely. What we all shred to think is the economic destruction and disaster it will leave along its path. The coronavirus impact on the US real estate will be felt and the amount depends on how fast we will get rid of it.
What will be the coronavirus impact on the US real estate?
While many trade pundits are skeptical about a downslide, we have reasons to believe that the coronavirus impact on the US real estate sector will linger on for months to come.
Sellers are withdrawing from the market
The sellers are withdrawing their homes from the real estate market now because there are no takers. Exactly how long will it take for this pandemic to completely subside is to be seen. The sooner this pandemic stops, the chances of recovery are fast. But the relapse cases in China are a grim reminder that this virus is here to stay longer. In that case, the economy will take years to revive. Even though the government is doling out stimulus package, people will spend only on essential items.
Layoffs, unemployment, reduction in salary, reduced spending- is going to be the new norm for a few months now. Every industry is hit hard by the pandemic. The hospitality industry, food, sports, transportation, and many others are all grappling with the complete halt of services and thus reduced businesses. Many companies have already laid-off employees with no certainty of the future. As of now, a record 3.3 million have filed claims for unemployment benefits in the USA. Many have reported a cut in their salaries.
When spending becomes less, the investments in real estate are too less to come by. People who are not sure about their jobs will not take the risk to invest in the real estate market even if the rates are low. While others with a strong financial background may take the wise decision of investing in real estate taking advantage of the decreased rates.
Commercial real estate will be hit
Hotels and cafes are badly hit due to the coronavirus pandemic. Places in the coastal areas of New York, California, and Florida that thrive on tourist income will be badly hit and the sales of commercial properties here may take a beating. The overall situation is largely dependent on where the coronavirus has hit badly. Some pockets of New York, New Jersey, and California may suffer more due to the effect of coronavirus. In other areas, although there might not be a drastic impact, the real estate deals would be slow and far less.
For people who have lost their jobs, paying back the dues to the lender will be challenging. They may have to replan their expenses to pay the mortgage or talk to their lenders.
While we are not sure about the coronavirus impact on the US real estate market, we would like to be optimistic. It is a good time for real estate investors. For people facing a financial crunch, it is a positive lesson to save money so that you can pay your mortgage even if you have lost the job. Let us hope for the best.
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