Aaron Marshall is CEO & Co-Founder of Keyrenter Property Management, the nation’s leading property management and real estate franchise.
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For everybody — and certainly those in property management and the real estate industry — this entire year has been a big question mark, or maybe an endless string of curse words. But I don’t think the real estate market is in as big of trouble as it may look.
If you’re wondering what your next move should be, I think you should do exactly what you would do if there wasn’t a pandemic. Buy. Sell. Rent. But you need to do it with your eyes wide open, and obviously, some regions in the country are stronger and healthier than others.
Here’s how I think Covid-19 will impact the real estate market for the rest of the year and into 2021.
People will continue to buy homes.
While certain areas, like deep in the city, are having trouble, the real estate industry in the suburbs and rural areas is doing very well. In fact, the National Association of Realtors reported on August 21 that sales of previously owned homes in the United States rose 24.7%, which is one of the best showings on record.
There’s no reason to think that won’t continue. The Northeast is struggling, probably mostly due to cities like New York and Boston, but otherwise, the country is doing well. And even Manhattan is faring better than it had been, with the real estate market improving (it’s better than where things were during the Great Recession), though rent prices for apartments are dropping. There will likely be a lot of ups and downs in New York City for a while.
As for why people are continuing to buy homes, there are likely a couple of reasons. First, some people simply want better homes and more isolated ones; if the pandemic will be here with us for a while, we might as well find somewhere extra nice and safe to live. In addition, mortgage rates are low, which, of course, makes property more affordable.
International buying is down and will continue to go down.
It isn’t surprising that buyers in other countries aren’t making a lot of real estate investments in the U.S., and that trend is expected to accelerate. That’s bad for the sellers — fewer people buying homes, and often, international buyers drive home prices up — but it’s good news for buyers because fewer people are competing for buying a home.
Rental properties, especially vacation homes, will continue to thrive.
If you have a home that’s off the beaten path and available for rent, chances are, somebody’s going to want to move in, either permanently or for a few weeks. There’s no question that the vacation industry suffered at the beginning of this pandemic — and is still suffering — but vacation homes in many areas seem to be doing quite well.
We may be complaining about standing six feet apart, but at the same time, everybody wants their space. If you have some of that space to rent, you have a very marketable commodity. Heck, even hotels, which have suffered mightily due to lockdowns and canceled vacations and events, are finding that they can get customers when they market their rooms as a place for harried remote workers to work for a day and get away from their spouse, kids and pets. For the time being, vacation rentals are likely to be a thriving industry, though it’s hard to imagine them ever really going out of style.
Technology will continue to make the real estate industry easier to navigate.
The internet transformed the way homes are bought, sold and rented and how property is managed. Later, smartphones reshaped things as well, with people suddenly being able to look for homes and rentals wherever they wanted and property managers able to do their jobs from a beach.
Well, Covid-19 is streamlining and transforming the industry again — for the better. I despise the pandemic as much as the next person and can’t wait to start shaking the hands of tenants and property managers again. But there’s no question that technology is making it easier for everyone to do their jobs. People, after all, are buying homes, sometimes without even meeting the real estate agent, and sometimes without seeing the house first (which seems nuts, but it’s happening). There’s little doubt that people will soon be able to do their entire jobs without getting out of bed.
OK, maybe that’s not a good idea. Get out of bed. Get a little exercise. And, besides, nature calls and all.
But, my point is there’s a market for property management technology like never before. I think before the year is up, and certainly next year, as easy as it may be now to collect rent, set up in-person appointments, offer virtual guided tours and so on, it’s going to get even easier.
So while the pandemic rages on, I don’t think people in the real estate industry have all that much reason to curse. These are tough times, personally, for all us, and a lot of people are suffering both personally and professionally. But in the real estate industry, it’s not hard to find a lot to be excited about. What’s unnerving, of course, is the unknown. But people are still selling, buying and renting as they try to move to new parts of the country where they’ll be more comfortable. If we can help everyone manage and live in their new comfort zones, then we’ll have found our own.
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?