To say that 2020 has been a challenging year, would be an understatement. Particularly, with the majority of the country being forced to shelter-in-place amid the global coronavirus (COVID-19) pandemic, every part of our lives has been affected in one way or another. As it pertains to real estate, families are fleeing big cities across the nation in search of more spacious, suburban homes. Additionally, investors are getting surprisingly good deals by taking advantage of the slow market and weaker economy and purchasing investment properties while prices are low. In general, a decent amount of families are moving in the middle of a global pandemic and here’s why:
1. People are Looking at their Home Differently
Being stuck at home during the height of the COVID-19 pandemic changed the way that people look at their homes. Particularly, the home became a safe place and made people want to invest in the quality of their homes. Some families were inspired to make upgrades and renovate, while others were inspired to upsize to a townhome or buy a home in the suburbs. Overall, quarantine had the indirect effect of being a marketing campaign for real estate. As many people realize that our homes are going to be the only place we work and play for the foreseeable future.
2. People Will Be Working From Home For the Foreseeable Future
The vast majority of the country has been working from home since early March. People have had to put together some sort of working space together on a whim. However, working from a kitchen table may not be the most ideal office space. Nevertheless, working from home and virtual learning will be the “new normal” for the foreseeable future. As a result, many families are looking into upgrading to an extra bedroom or office space. And, with interest rates hitting record lows, upgrading has never been more affordable than it is right now.
3. Real Estate Prices Have Dropped
Real estate prices have dropped in places like New York City. Particularly, real estate sales in New York City fell by approximately 54 percent. Similarly, the median sales price in NYC fell to just below $1 million, which is approximately 18 percent lower than last year. Overall, the NYC real estate market has definitely shifted in buyers’ favor spearheaded by low sales activity, the economy, and desperate sellers.
With low activity, desperate sellers, and an economic slump, the market shifted quickly. In general, this has been the trend in big cities across the nation.
4. People Need a Place To Stay Especially Amid the Global Pandemic
Like every other industry, the multifamily real estate market has not been spared from the COVID-19 pandemic. However, multifamily real estate has an edge over other sectors because people always need a place to live, especially during the stay at home orders. History tells us, specifically during the last two recessions, multifamily real estate is a safer, long term investment. For investors in multifamily real estate, that means waiting for the right time to purchase and possibly relinquish real estate. Housing inventory was low even before the pandemic and has grown even scarcer, amid the pandemic. Overall, multifamily investment properties offer the best of both worlds: the potential for high returns and minimal risk. Notably, among all real estate investment options, multifamily properties have the highest ROI together with the second-lowest volatility.
5. Townhomes Are a Great Option for Families Who Want to Remain in New York City
In New York City, it no secret that many homes and buildings are relatively congested. Amid the coronavirus pandemic, many residents were fighting with how to quarantine and keep household members safe in such a congested environment. Privacy and lack of communal neighbors make owning a townhouse more advantageous compared with owning a condo. Not having the ability to use building facilities, bacteria in elevators, and shared HVAC that can potentially spread the COVID-19 virus does not exist in townhouses or brownstones.
Overall, while it is true that COVID-19 has thrown the real estate industry some curveballs this year, there are still a lot of bargains for families looking to upgrade and/or move.
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Authored by: Stanley Montfort
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