The COVID-19 Effect on Real Estate
How the pandemic is affecting home values.
Posted: January 25, 2021 by Anna Jotham
Whether you're thinking of buying a new home or contemplating selling your property, home values are likely top of mind. And with a global pandemic continuing to have an impact on nearly every industry, it should come as no surprise that analysts are closely watching how COVID-19 and its ripples are affecting the real estate market as well as property values.
The implications for the real estate industry are many. First, consumer behavior has been dramatically impacted by pandemic mitigation efforts, as has the corporate environment — with an estimated 40% of the American workforce continuing to work from home. The remote workforce trend shows no sign of abating anytime soon; in fact, some companies have indicated workers are to continue operating from their home offices indefinitely, or in some cases, permanently.
Changing behaviors and their impact on housing values.
All of these changes in American lifestyles contribute to the demand for housing, which, in turn, affects home values.
Home prices are still on the rise amid multiple influences.
Home prices in 2020 are up 15 percent year-over-year, even as the election bred uncertainty. Pending sales were reportedly up 31% year over year for the four weeks ending November 8. The median sale price hovered over $320,000, which is the highest median home price on record. Meanwhile, new listings of properties were up 7%, while active listings fell 20% year over year. Properties continue to move fast, with 43% of sellers accepting an offer within two weeks of being listed. Further, the sale-to-list ratio — which shows how close properties are selling compared with their asking price — has increased to a record high of 99.5%.
It's also important to note that home buyers and sellers who had pressed pause on their real estate plans pending the election are returning to their efforts with renewed energy, particularly bolstered by hopes for a new vaccine against COVID-19.
Also of note: in October, demand for vacation or second homes increased a whopping 100% year over year. Many experts attribute the increase to the new work-from-home economy and the desire of many Americans who live in the city to shift to the suburbs or other areas outside the city center during the pandemic. The surging demand may continue to push pricing upward as long as the trend continues — with experts reporting that home values in seasonal towns rose 21% year over year in October.
In a seller's market, having the right Realtor can make all the difference.