Covid-19 sent shockwaves throughout the world. The real estate grappled with non-selling homes and slow demand for new homes. The federal regulations came to the rescue, decreasing the interest rates on home loans. The year 2021 will be seen as a revival year, with the economy bouncing back to track.
The US economy has risen considerably after the Covid-19 pandemic sent tremors in the struggling economy. The hospitality sector was the worst to suffer, and its implications were deep and are still felt in the recovery period. Lifestyle Equities, as a responsible real estate consulting firm, is playing its position by advising and helping potential buyers and sellers seize the right opportunity post-pandemic. Affordable housing and keeping up with the advanced technologies are some areas where we expect solutions. The real estate recovery depends on how fast all the stakeholders get together to adapt to the changing needs of one another.
Let us see the specific areas where there are real problems with the real estate industry and the possible solutions to them.
1. Affordable Housing
Cities that are attracting millennials are also facing a crunch of affordable housing. People find it difficult to buy homes in places like San Francisco and Seattle, where even the supply of affordable homes is less. The rising healthcare costs and the student loans have compounded the need for reasonably priced homes. The stakeholders in the real estate industry have to sit together to find solutions. It cannot be possible that millions of Americans cannot afford homes or struggle to pay for out-of-reach homes.
2. Home investors relying heavily on agents
The traditional home investing methods included the simple listing in MLS databases or contacting a real estate broker to get the job done. The US is filled with around 2 million real estate agents and brokers, each vying for their share of the pie. It has resulted in a massive mis-spelling of homes with agents going for the best deals but not understanding the client’s needs.
We can see a change with a larger number of people hiring the services of real estate consulting firms. The consulting firms differ from the traditional agents in giving need-oriented advice. Since they charge a fee for consultation, they are not worried about the commission, and hence they do not mis-sell homes to potential home seekers. A reliable real estate consulting firm like Lifestyle Equities has the needs of clients in mind, whether it is a home or commercial real estate deal.
3. Homes for seniors
With the aging of baby boomers, they are shifting from multi-family homes to senior living centers. Seniors are now preferring homes in communities that have everything from on-site gyms to gardens and theaters. They want to live in extensive communities complete with amenities fit for their lifestyle. They are willing to sell their homes, but the millennials have no money to buy these homes. The realtors will need to think about building homes for seniors fit for their accommodation.
4. Slow economic revival
The global economy reached a tipping point during Covid-19, and its aftereffects are rising unemployment and inflation. The annual job growth has dropped, and so has the industrial production expansion. There is a slight improvement in employment from the highs during the Covid-19 recession, but it is yet to reach the pre-pandemic level.
The hospitality and travel industry is showing signs of revival. The post-Covid-19 economy recovery will be slow, and there will be muted demand for home and commercial properties in the next decade. We have to take this into account whenever we make a roadmap for the real estate market recovery
5. Migration of people
The flow of people between states and countries has been the driving force for the real estate boom in San Francisco, Seattle, Texas, and New York. Even though the migration between cities has resumed, Covid-19 has put a temporary halt to the immigration process.
The changes in migration have affected the commercial and residential real estate with the hospitality and retail space property market. More urbanites are fleeing the congested cities to the suburbs. But one thing to take into consideration is that remote working is possible only for some sectors, while most of the demanding jobs require physical presence at the office. The flexibility of people to move to the suburbs while continuing to work from home has enhanced the value of these towns giving good opportunities for community development in them.
As the world awakens to a new reality of its vulnerability to extreme events like the pandemic, terrorist attacks, hurricanes, floods, and wildfire, we are forced to make changes in the infrastructure to sustain life and commerce. Basic infrastructure needs like the repair of roads and bridges are the need of the hour to provide better last-mile connectivity.
7. Commercial real estate space utilization
Covid-19 vacated all the commercial office spaces. Businesses that were not able to sustain the high rents emptied the premises leaving vast offices unused. The landlords who were comfortable with the rentals were suddenly left with no means of income to pay the mortgage. But the pandemic gave them another chance to convert their offices into warehouses, data centers, and medical units. The need for commercial real estate properties that can be easily transformed into spaces as required by the clients are in huge demand.
8. Risks in real estate stocks
REITs have become popular in recent years. There is a likelihood of inexperienced leadership managing these funds. To manage such massive funds, you need expertise in finance, underwriting, and other real estate disciplines. In case of a sudden market downturn, the management must be ready with risk diversion. The mortgage REITs took a hit during Covid-19 but have shown recovery by restructuring credit lines. The market is still flush with liquid debt funds and now what we may have to see is the amount of distress and loss that may hamper the real estate growth in 2021-22.
The market is still new to the aftereffects of Covid-19. We still haven’t figured the needs of the real estate investors or the demands of commercial real estate. In this mode, it is always better that you seek expert advice from Lifestyle Equities, a reliable real estate consulting firm, that helps you make the most rational decisions based on your needs and budget. We attempt to overlay your priorities in an already changing real estate environment.