Real Estate The Great COVID-19 Migration
A year after the pandemic hit, it’s clear COVID-19 forever changed the housing market. A local expert shares insight into the big shift and real estate’s new normal.
As we lap the one-year mark since the COVID-19 pandemic began, there’s still a lot of uncertainty, but one thing is for sure: the pandemic has re-ordered real estate markets across the board, at a record rate, on an unprecedented scale.
Property views on real estate sites such as Realtor and Zillow are up over 50% this year, inventory in the 100 top US metro markets has been shrinking, along with days on market and the gap between list-to-sale price. Then, the cherry on top: record-low interest rates. Now it’s clear, by every metric, Americans are moving faster now than they were before the pandemic.
“More than ever, people are working remotely and realizing they have the ability to work from where ever they want to. They’re being more selective about where they choose to live because they can,” says Cincinnati-based Ron Erdmann at Guaranteed Rate. “Before, they’d select their geographic location based on where work is based, even if it’s away from family and friends. Now, they’re realizing they have the ability to live and work near family and friends, or relocate to a dream location like a beach or mountain scape.”
COVID-19 raised questions – beyond markets and interest rates – that don’t have answers yet, such as: Will people feel safer living in the south and southwest where they can spend all year social distancing outside? What if companies let employees work remotely forever? Why go back to retail shopping when I’m used to ordering everything online now? What’s the point of living “downtown” if half of the restaurants, bars, and attractions never open back up?
How these questions get answered will ultimately re-order how Americans live in the post-pandemic new normal, Erdmann says. Also, as a result, this will determine which markets will experience growth, demand, and price appreciation over the next 3-5 years, and which ones won’t.
“There’s now a new wave of opportunity for areas that were once considered too small, too southern, or too desolate,” Erdmann explains. “Now, that’s what everyone wants.” Those qualities are now rising to the top of the real estate desirability lists as Americans seek warmer, healthier, less dense, better educated, and more mobile places to live that offer closer access to the outdoors, better hospitals, smaller schools, and more open space.
Erdmann says his team is seeing a huge surge in mortgages for people buying second homes or summer homes for the same reasons. “You can spend six months out of the year in your home town and six months out of the year on the beach without it affecting your work situation, and you can do it at super low rates, so people are taking advantage.”
If you’re looking for a second home or to move to an area outside of your current market, Erdmann has some advice. “Some banks only lend in their geographic footprint, some can lend nationally,” he says. “For example, in my network, there’s someone who can lend in all 50 states. You’ll want to find an experienced mortgage professional who can help no matter where you’re looking.”