Aaron Marshall is CEO & Co-Founder of Keyrenter Property Management, the nation’s leading property management and real estate franchise.
If you’re in property management or you work in any sort of real estate, it would be very easy right about now to feel pretty bleak about your profession.
“Nobody in their right mind,” you might think, “is going to buy or sell a home. People won’t be renting out their homes. As a profession or purpose, real estate will soon cease to exist.”
But, of course, that’s just not the case. Even during the Great Depression and definitely during the Great Recession, people were buying and selling homes and renting properties. It happens less in harder times than during the boom times, and it’s more challenging, but as long as people need a place to live, the real estate industry marches on.
Meanwhile, I know from experience that the Great Recession was a challenging time to be in the real estate business. But there were still deals being made, and that’s the case now, too.
That doesn’t mean the times and industry aren’t changing. There are several real estate trends that I see the coronavirus launching.
Urban sprawl will continue.
Urban sprawl has been a thing for a while now, but a year ago, we were also talking about how cities were booming. Meanwhile, Generation Z was headed to the cities. Early this year, it was heady times for the cities.
But now? People are doing what they can to get out of the cities, which are densely populated and like a smörgåsbord for the coronavirus.
It only feels like the pandemic has been with us for years instead of months, and so the data on how many people are moving isn’t exactly out yet — but it does appear that people are relocating and will continue to move from the cities to the suburbs as well as smaller, more rural and spread-out towns.
So while it may be tough going in many metropolitan areas for some time, there are still a lot of real estate markets across the country that are thriving right now.
Urban sprawl will also be fueled by the fact that physically working in the office isn’t considered a necessity for many companies any longer. You can live an hour or two or three out of the big city if you don’t have to be in a downtown office every single day of the week.
Banks are going to insist on getting more money for a home loan upfront.
That’s already happening. Almost overnight, as soon as the pandemic started to hit, lenders began insisting on higher down payments. It doesn’t look like that’s going away any time soon, but I think that’s largely a good policy for many buyers. For instance, if you need to sell in a couple of years, at least you already have some equity in your house.
Bigger homes may sell faster.
There’s some evidence that as the pandemic makes staying home chic — the wealthy are taking advantage of lower rates and buying bigger homes. If the rates continue to stay low, and the pandemic remains with us, builders may be encouraged to go big when they build new homes, and the larger homes, in general, may sell faster. McMansions, which seemed to be the rage before the Great Recession, just may make a comeback.
Vacation homes may make a comeback, too.
Well, I’m not sure they ever left, but there has been some evidence suggesting that wealthier families are buying vacation homes. You tend to vacation near beaches, lakes, in the mountains — anywhere but the densely populated city. Of course, the beaches are often densely populated, but it’s the beach. People will always want to live near the water.
It should be a buyer’s market for at least a few more years.
Yes, that sounds like a bold statement, and the way things go in the news, maybe in two weeks I’ll be taking this prediction back. But while the pandemic is scary stuff, and it’s certainly done a number on our economy, the current housing market was in far better shape than it was before the Great Recession of 2007 to 2009 (although it was really 2008 when we all noticed it — and the effects lasted for years).
Back then, there were too many houses. People had overbuilt, and so you had a lot of situations where people couldn’t sell because there were too many homes for buyers to choose from. Or if you did sell, it wasn’t as if you could name your price. You could name it, but it was often followed with laughter.
Now, we don’t have a glut of homes, and so if you want to sell, generally, you can. That should keep the market in good shape for the next several years.
Don’t get me wrong; these are difficult times, and I’m not trying to make it sound like everything is peaches and cream. But while some areas of the country have extreme challenges, that just means that in other areas, new and exciting prospects are emerging in real estate and property management. Like searching for a dream home, it may take a while to find what you’re looking for, but on plenty of doorsteps, I still see a welcome mat.