It’s been a year since the COVID-19 pandemic totally disrupted our reality. In a remarkable display of resilience in the face of major change, we adjusted to working from home and setting up eLearning environments for our children. We learned how to navigate digital communication platforms and order groceries online. We also started to rethink our housing priorities. In this blog post, we’ll discuss how the pandemic has affected trends in the real estate market.
COVID-19: A Catalyst for Major Change
In the scramble to set up home offices and classrooms, many families realized they simply need more space. Not having to commute to office buildings prompted many remote workers to reevaluate whether they needed to pay higher prices to live in urban centers. Being stuck at home with no entertainment options all summer made having a backyard enviable—swimming pools even more so. Economic policies put in place to help prop up a slowing economy brought interest rates for housing to historic lows.
Nationwide stay-at-home orders prompted the real estate industry to go digital. From viewing properties via webcam and eSigning closing documents, to utilizing online payment platforms, the industry displayed a remarkable ability to adapt when safety concerns over the pandemic forced us to shift away from face-to-face interactions.
Working Remotely Disrupts Housing Market
The nationwide stay-at-home orders put in place to help slow the spread of COVID-19 caused businesses across the country to transition to operating remotely—and this trend doesn’t seem to be going anywhere.
According to research and advisory firm, Gartner, more than 82% of company leaders surveyed said their organizations plan to permit employees to work remotely at least part of the time upon reopening from the COVID-19 pandemic.
Not having to go into the office every day has caused people to rethink their housing priorities. When you have two people working from home—not to mention kids attending school remotely in the same living environment—things tend to get crowded quickly. Making due without a home office or yard to enjoy time outdoors became much harder last year.
UpWork recently surveyed 20,000 people about their moving intentions. According to the results of their survey, between 6.9% and 11.5% of households are planning a move due to the growing availability of remote work due to COVID-19. Of this group, 6.5% are planning on moving to a different area due to the greater ability to work from home; an additional 2.5% are moving because someone in the household can work from home; and another 2.5% are moving due to overall greater working from home job prospects.
Outbound Migration from Urban Centers
With fewer people having to work in offices located in urban centers, there has been an outbound migration from large cities.
According to Axios, “As many as 23 million Americans—more than 10% of the adult population—are planning to move as a result of remote work, mostly to cheaper and less dense places. 54.7% of people are moving two hours or more from where they currently live, which puts them out of daily or even weekly commuting range — indicating that many likely aren't planning on commuting at all in the future.”
Real Estate Market Remains Strong
Despite unprecedented disruptions to daily life, the real estate market has remained strong throughout the pandemic. According to a November 2020 Forbes article, “By and large, the pandemic housing market has defied all expectations by outperforming the 2019 market in both volume and price. New home sales in September outpaced sales in the same month in 2019 by 32%.”
This has been helped, in part, by historically low interest rates. We started 2021 with the lowest mortgage interest rates in history, but according to CNN Business, these lows aren’t expected to last. In late February, “mortgage rates rose to the highest point since August 2020. The average interest rate on a 30-year fixed-rate mortgage went up to 2.97%, according to Freddie Mac. The 15-year fixed-rate mortgage rose to 2.34%. It marked the biggest one-week move since last March, when the pandemic was beginning to unfold.”
While interest rates are still relatively low, we probably won’t be seeing new record lows on a regular basis like we did in 2021.
Navigating the homebuying and selling process in the midst of a pandemic can be daunting. If we’ve learned anything in 2020, though, it’s the importance of having a safe and happy space for you and your family to share.
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