As 2019 came to a close, an already robust real estate market received quite a jolt from the COVID-19 epidemic. And now, more than two years after the pandemic started, the market seems forever changed. What do these lasting housing market changes after the pandemic mean for buyers and sellers?
Lasting Housing Market Changes After the Pandemic
Economic volatility, the occasional stock market crash, and political disturbances create upheaval in the real estate market from time to time. Still, normal consumer behavior tends to return after things calm down. Unlike past disruptions, some recent changes may become permanent.
More Americans Choose to Work from Home Today
One of the striking changes for employees across the country during the pandemic was the option to work from home. Now, despite the virus’s loosening grip on our behavior, more Americans choose to telecommute rather than work from home because the pandemic forces them.
A survey conducted in early 2022 revealed that almost 60 percent of employees who worked from home did so because they wanted to telecommute. The increase is dramatic when one considers a similar survey conducted before the pandemic where less than a quarter of respondents indicated they chose to work from home.
What’s the impact on the real estate market? Telecommuting gives workers the power to work from anywhere, which means they don’t need to look for a home within commuting distance of their job.
Buyers Greatly Outnumber Sellers
It was already a seller’s market when the pandemic hit and was decidedly so in busy markets like Southern California. Still, the pandemic reduced the number of available houses in an already tight market. Complicating matters was the surprise real estate rebound that occurred in the middle of a worsening pandemic.
Research conducted by the United States Census Bureau showed a remarkable decline of houses for sale in early 2020. Unfortunately, the divide between available homes and the number of prospective homebuyers only widened as demand mysteriously increased in 2021.
With the market already struggling to keep up, the number of houses for sale will likely continue to lag significantly behind buyer demand despite the end of the pandemic. The industry is unlikely to see a return to a buyer’s market any time soon.
Quick Offers and Video Tours
The pandemic all but paused sales activity for many industries, and the real estate industry was one of the pandemic’s most notable victims. Real estate agents leisurely welcoming their buyers into beautifully staged homes for a weekend changed in favor of brief video tours.
Even after agents once more began allowing homebuyers inside homes, the pace continued at an incredible rate, with some buyers making offers before they ever saw the house in person. Those buyers who did see homes in person had to contend with an overwhelming number of competing bids.
Research indicates that the speed at which homes sell post-pandemic is faster than any time in the past thirty years. A shocking statistic shared by The Los Angeles Times suggests that more than 60 percent of homebuyers nationwide decided to make an offer on their home without first seeing it in person.
Agents will continue to see a furious buying pace. And there is very little chance of the market slowing down in the next few years.
The News Isn’t All Bad for Borrowers
Although it might seem challenging to buy a house, conditions remain favorable for buyers willing to take the plunge. Data published by The Motley Fool suggests that historically low interest rates will continue throughout 2022.
Even if the Federal Reserve increases interest rates, mortgage rates should remain affordable, and well-qualified buyers should feel confident in getting approved. Mortgages aren’t nearly as difficult to get as they were when the Great Recession ended in the late 2000s.
Scientists expect the former Covid-19 pandemic to transform into an “endemic” virus. This means it will come back each year like the flu or the common cold. The changes brought to the real estate industry by the pandemic probably won’t disappear completely, either. However, the right real estate agent and Los Angeles mortgage broker can make all the difference in helping new buyers get their next home.