Is now a good time to buy a house? Is now a good time to sell? What about commercial real estate? Lately, we have been getting a lot of questions about the real estate market.

Like the stock market, the real estate market is governed by supply and demand. The coronavirus pandemic sharply disrupted supply and demand in most markets, but how has it affected the real estate market?

We will explore where the real estate market was at pre-pandemic, where it is at now, and what the outlook is for the future.

Where was the real estate market at pre-pandemic?

Pre-pandemic, the state of the economy was mostly strong. Unemployment was low, the stock market was at all time highs, and interest rates were low.

The combination of low interest rates and a strong economy led to strong demand for real estate. Most new listings were getting multiple offers before selling.

While demand was high, supply was relatively low. The inventory levels of houses on the market had reached its lowest point since 2012.

A market with high demand and low supply, is typically considered a “seller’s market.” With this in mind, we would expect the market to stabilize by an increase in price and increase in home construction.

Where are we at now?

In response to the pandemic and the associated lockdowns, the Federal Reserve decreased interest rates even further. Low rates indicate a great time to take out a home loan. This has led to a recent surge in demand, which was already high.

This seems to be one of the biggest “seller’s market” in history. Sellers who are putting their homes or investment properties on the market are seeing multiple offers and immediate sales.

Despite a strong “seller’s market,” we are not seeing a flood of new houses for sale. This demonstrates an interesting cycle. Even though their homes are worth more than ever, homeowners are not seeing good enough alternatives to justify moving, especially given the complicated process of moving during a pandemic.

Overall, in the face of the Covid-19 pandemic, buyers never left the housing market, and sellers became extraordinarily cautious. This high demand and low supply, if it continues, will likely lead to the continuing rise in housing prices.

What is the outlook for the future?

One method to slow down the rise of housing prices is to increase supply. If people will not sell, then the next solution is to build more houses. We expect that construction of new houses will pick up to meet the growing demand.

We also would expect demand to shift from urban real estate to suburban real estate. This pandemic has unlocked the possibility of working from home for many professionals. With the ability to work and collaborate virtually, people may prefer the benefit of space & comfort versus the benefit of being close to colleagues.

We will continue to monitor the pandemic’s impact on the housing market. One big thing to watch is how long the impacts of the pandemic will last. Will demand for houses remain high with people flocking to the suburbs or will people quickly return to their old pre-pandemic habits? Time will tell.

To discuss further, visit our Schedule A Meeting tab to schedule a 15 minute session with Tori or myself!

Stay well,

Alex