Long Term Real Estate Effects of COVID-19
There are numerous ways the pandemic will affect real estate long term. Here are a few.
Trillions of dollars are being printed by the government since the Coronavirus shut down most of the country. Many businesses and workers that have been affected by the pandemic are receiving relief checks in the mail to offset losses in income and revenue. For the short-term, we may see some deflation because demand has dropped significantly in a lot of industries–empty seats on airplanes, new cars crowding dealership parking lots, etc. As stay-at-home orders have started to soften in May, demand should slowly pick back up and we’ll likely start seeing inflation over the next few years. The good news for investors is that real estate usually fights inflation. It allows investors to pay off mortgages with inflated dollars (depreciating debt), it raises rents and property values and it generally appreciates faster than inflation rates.
As summer approaches, 2020 graduates may start to realize that not being able to celebrate with friends and family could be the least of their worries. With 20 million Americans getting laid off in April from the spread of COVID-19, unemployment rates haven’t been this high, 14.7 percent, since the Great Depression. It seems likely that there will be a replay of what happened to millennials in 2008. Only this time, the New Silent Generation (or Gen Z) may suffer the most. While the Coronavirus hasn’t put most of us in an ideal situation, landlords should benefit as this upcoming generation will probably be renters for much longer than they otherwise would. Thanks to COVID-19, we expect real estate investors to have a larger pool of renters over the next decade.
Home Sales Will Slow
Home sales went down halfway through March when most of the country started going into quarantine with the fast-spreading Coronavirus. However, people who were looking to sell or buy a few months ago, before the Coronavirus hit, are likely still planning to do so, just maybe not right now. What this could mean for the real estate market is that the number of homes sold may level out for a while. But long-term, it always bounces back.
RE/MAX Realty Professionals—The Results Team—is ready to help you buy or sell your home! Visit www.andrewl185.sg-host.com. Or call Lesa Miller at 812-360-3863 and Jenivee Schoenheit at 317-258-0995.