The U.S. housing market naturally ebbs and flows, but the events of 2020 altered its trajectory in unprecedented ways. As COVID-19 spread around the world, the pandemic set off a chain reaction of sorts that affected nearly every aspect of daily life. In terms of the housing market, trends and changes stemming from the pandemic include a supply-demand imbalance and widespread pandemic-induced relocation.
Yet while heavy words such as “crisis” have been used to describe the post-pandemic real estate landscape, many areas of the country have actually seen a housing market boom as well as huge increases in home values. In Boise, Idaho, for example, home values rose by 32.5% between April 2020 and April 2021. Boise’s numbers represent the highest increase in the nation, according to CBS News, but every state’s property market has been affected in some way by the COVID-19 pandemic.
The rise of remote work has also played a major role in altering how Americans buy and sell real estate, from homes and parcels of land to commercial property. One major perk of working from home is the flexibility it offers when it comes to adopting a long-term home base. In 2021, geographic location is no longer necessarily tied to the workplace, giving prospective home and business owners more options than ever before. Let’s take a look at the changing landscape of real estate in the U.S., as well as ways in which buyers and sellers can streamline the process in the open market.
The U.S. Real Estate Market: Challenges and Opportunities
As remote workers continue to embrace the freedom that comes with a nationwide open market, residential housing and commercial property owners alike have been affected. And as the housing market is stabilizing and/or thriving across the U.S., commercial real estate is another story altogether. In fact, experts predict that commercial real estate demand “could take longer to recover” as business owners restructure and assess their needs, post-pandemic.
To adhere to national and localized public health mandates requiring social distancing, owners, and operators of businesses in every industry were suddenly forced to adapt their operating model. Some chose to temporarily shutter their doors and lay off staff; others took their shops entirely online rather than shelling out monthly rent.
According to the Federal Reserve, businesses permanently close at a rate of about 8.5% annually. Yet the fallout from COVID-19 resulted in an “exit rate about one-quarter to one-third above normal” among commercial establishments. And as the pandemic persists, with new variants threatening public health, prospective business owners are making difficult choices in regards to their real estate needs. Industries in which human interaction is vital, such as restaurants and live music venues, are especially susceptible to the continued economic effects of the pandemic.
Catering to Market Trends and Prioritizing Community
Along with drastically impacting the national economy as well as the overall real estate landscape, the pandemic has left many of us feeling isolated and longing for a human connection. As such, many Americans are looking outside the box when browsing the real estate market for a new home, commercial property, or storefront. Increasingly, U.S. citizens want to feel as though they’re part of a healthy, vibrant community.
Sustainability is also an important consideration for property owners in 2021 as average global temperatures continue to rise. Walkable communities are thus increasing in frequency throughout the U.S., as they are favorable from both an environmental and social standpoint. The benefits of walkable communities include improved safety, increased social interaction, and better economic outcomes for local businesses. Properties for sale within or near walkable communities are therefore highly coveted in our post-pandemic world.
Improving Your Chances in a Seller’s Market
For their part, buyers looking to close the deal in an increasingly competitive market have numerous options, whether you’re eyeing a single-family home, office building for an expanding company, or investment property. Having a loan pre-approval in hand before approaching a seller, for example, can get you to the top of the buyer list. You could also choose to forego certain aspects of the purchasing process, such as typical home inspections, to make your offer more appealing to sellers.
Home inspections are considered a crucial part of the home buying process, securing your investment as well as helping you to obtain financing. Any damages uncovered during a professional home inspection fall on the seller to repair or otherwise address. Sellers may end up decreasing a property’s asking price based on the results of an inspection, which isn’t an ideal outcome on their end from a profit margin standpoint.
Proactive buyers can, therefore, take a calculated risk by opting out of the inspection process and personally taking on any pre-existing structural problems. Other ways to stand out from the crowd when making an offer include penning a personal letter to the property owner or providing a generous timeframe in regards to seller move-out.
In many ways, investing in real estate in a world forever altered by the global pandemic is a challenging endeavor. Understanding the myriad ways in which the real estate market is adapting to the changes brought about by COVID-19 is the first step towards fostering a stable housing and commercial property market over the long term.