6 Ways Covid-19 Is Changing Real Estate

The COVID-19 pandemic has had profound effects

on just about every aspect of Californians’ live s

and those effects are unlikely to disappear even

once vaccinations are widespread. No matter what

happens with the pandemic this year, the way we

ractice real estate has shifted in response to the

irus. Here are some of the things to look out for in the coming year

"Home" Means More Now

There’s nothing like having to spend all your time at home to make you fully grasp the importance of your living space. As soon as real estate was listed as an essential service last April, buyers with the financial wherewithal started competing for homes with more square footage, outdoor spaces, home offices and larger kitchens. C.A.R.’s monthly Consumer Housing Sentiment Survey also showed the percentage of consumers who thought it was a good time to buy a home actually increased with the onset of the crisis. More first-time buyers have entered the market, too, reaching the highest share in 10 years (a 38 percent market share), according to C.A.R. data.

Suburban Markets Are Booming

The work-from-home trend is prompting city- dwellers to pack up shop and move to the

suburbs, where homes are both bigger and less expensive. Take smaller market Chula Vista as an example: The city with a population of approximately 270,000 saw unusually strong buyer demand push active listings down 54 percent year-over-year in August as home prices jumped 11.4 percent.

“Instead of living in a large building with shared ventilation and little space, people now want a larger home, a yard and a pool,” Dwiggins says. Urban flight has been gradually occurring over the past five years, but the pandemic has accelerated that trend. Overall, 43 percent of potential home buyers say the pandemic has made them more likely to look in rural

towns and city suburbs instead of dense city centers, according to an NAR-sponsored survey.

But don’t discount the draw of the big cities just yet. “I think urban flight is overstated,” says Leslie Appleton-Young, C.A.R.’s former chief economist (Appleton-Young retired in December). “There will always be people who, given the option, will want to live in a denser environment.”

Everybody's Going Virtual

Virtual showing and closing solutions aren’t new,

but thanks to the pandemic, they’re now ubiquitous. Buyers are growing increasingly accustomed to the Facetime walkthroughs and 3D tours, so much so that new listings without these features may give buyers pause. With the pandemic still underway, these virtual solutions show no sign of diminishing soon and many realtors are likely to continue using them well after the pandemic ends.

Health Is At The Forefront

Unsurprisingly, in the midst of a global health crisis, buyers and sellers have placed increased importance on cleanliness and personal safety throughout the transaction. This focus on health standards isn’t likely to disappear any time soon many home buyers and sellers hope procedures such as making hand sanitizer available throughout the house, providing sanitary wipes, and limiting the number of visitors in the house will remain in effect even after the pandemic.

And buyers are increasingly interested in wellness not only during the transaction, but in the homes themselves.

Second Homes Are In

High Demand

Google search trends for the terms “buying a second home” and “buying a vacation home” reached a five-year high in July, jumping 235 percent annually. Home sales in vacation destination areas started accelerating in July 2020 and posted a 34 percent annual gain this past fall, NAR data shows.

C.A.R. data shows that sales in resort markets like Lake Tahoe, Lake Arrowhead, Mammoth Lakes and Palm Springs saw sales more than double during

the second half of 2020 from where they were the previous year. While many of these buyers are newly minted work-from-homers seeking a new primary residence, many are shopping for vacation homes, figuring hotels won’t be safe for some time now. Funds that may have once been allocated to travel expenses can now be funneled directly into the down payment.

The Housing Supply Is

Even Tighter

Sellers hesitant to list during the pandemic further accelerated California’s inventory woes, bumping

up home prices in the process. In September, the California median home price reached an all-time high of $712,430, a 17.6 percent jump year-over-year. Home sales remain strong, notably in the high end of the market, and that is projected to continue well into the year.

“ Inventory issues will persist in 2021,” says C.A.R.'s new chief economist, Jordan Levine. “Sellers will eventually reemerge into the market once they recognize that homes are selling quickly and prices are rising. But a housing shortage persists in the state.” California remains about 3 million homes short of what its population needs. Still, as more listings emerge, C.A.R. predicts price growth will moderate somewhat in 2021 (a 4.4 percent projected overall annual growth, in contrast with 2020’s 11.6 percent).

“Historically low interest rates, continued population growth, lack of new home development and significant lack of inventory will continue to drive our current real estate market through at least 2021,” Dwiggins says. “And we see no signs of that slowing down for now.”

Featured Listings

5823 West Manchester Avenue

Westchester

3 Bed | 2.5 Bath

Kimberley Nicol

Marketing Manager
M: .310.977.4885.
[email protected]

Sources: California Real Estate Magazine; C.A.R. Research & Economics; Center for American Progress; Urban Institute; National Associations Of Realtors; Point2Homes; John Burns Real Estate Consulting

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6 Ways Covid-19 Is Changing Real Estate

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