The COVID-19 Effect: Unexpected Impact of Coronavirus to Real Estate
COVID-19 put the world at a halt and bestowed a level of uncertainty for the future. The pandemic caused a global lock down to save the lives of people who are unaffected by the virus. Everyone was expected to quarantine themselves which resulted in businesses closing down and there fewer expansion activities.
According to JLL Research & Strategy, “The level of uncertainty in the economy is currently at an all-time high with the trajectory of the recovery difficult to forecast.” Unfortunately, this comes with higher numbers of unemployment rate; a lot of companies had to lay off some of their employees, and some completely shut down their business.
For these reasons, online selling/stores and service became prevalent in these trying times. More and more people utilize the power of the internet and social media to earn money and give services to people that require it. Freelance and online jobs are opening as well since the certainty of the lockdown and the situation of COVID-19 is unsure.
With changes in the economy, of course, there are significant changes in the world of real estate. Since people are expected to stay at home, canceled vacations and trips have affected hotels and rental places, as well as tourist spots that rely on tourism for their income.
There is a study made by OJO Labs published in April 2020, entitled “Uncertainty, Captivity, and Opportunity: Homebuying in the Age of COVID-19.” In this study, OJO Labs looked into 200 homebuyers that were planning to purchase a property before COVID-19 hit and observed the problems that arose during the pandemic.
It is not a secret that home buying and real estate in general, had existing problems and issues even before COVID-19. And since the pandemic, issues such as rising unemployment, interest rates drop, tightening of mortgage requirements, and the shelter-at-home guidelines require people to stay home.
In this study, they discuss the issues present that with the lack of financial security, the buyers feel afraid of purchasing since they have no control. There is no certainty in their jobs, their savings since the pandemic is still ongoing. Another issue in regards to the delay of searching for houses and properties is because of uncertainty in digital search. Sure, the internet provides a good avenue for research but without physically looking at the property, there is no assurance that the place will fit the buyer.
However, this study also found that those who are delaying their search are largely still looking at available listings. In the data, 28% of the homebuyers are looking at listing photos and 25% reported taking video tours. 30% of them are reported looking at available listings more often than before their search was impacted by COVID-19.
Homebuyers are now actively looking for a comfortable space in their next home after spending so much time indoors. Areas such as kitchens and common rooms are often what homebuyers are looking at.
There is still so much to learn in this new reality that the world is in. Since the pandemic, life-changing events are still occurring and may continue while COVID-19 is still around or it may change once it’s all over.