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How Has COVID-19 Affected Your Home Value?

The pandemic has affected all of us but the housing market is one of the few places that has seen a boom during these tough times. The housing market has seen a huge increase and houses are selling for unprecedented prices in some areas of the country. Let’s examine why the housing market so much during the pandemic has flourished and what it means for the future of our real estate market and the value of your home. 

 

house value

How did this happen?

 

In the early days of the pandemic, the world was gripped with so much economic uncertainty. There were layoffs, border closures, and health issues facing so many people and many of us were forced to stay within our homes for a longer period of time than we ever have. With so much up in the air, many people chose to sell their homes or trade-in their stocks to make sure they had a safety net. 

 

At that time, the real estate market wasn’t much worse than it is now but it was starting to become flat and much of it was due to the pandemic. When lockdown restrictions came into play, many people felt like buying a home was impossible, especially when they were unable to tour it in person. At the same time, people who were stuck in their homes were quickly becoming bored with seeing the same walls every day.

 

Working from home has led many of us to discover what we enjoy and dislike about our homes. People who enjoyed their small apartments were suddenly yearning for a larger workspace after working from home for months. This meant some people were searching for new homes but finding few options available. Anyone who was choosing to list could take advantage of this perfect storm and raise their price a little higher than average. 

 

Many other factors came into play with the housing market including the rising cost of lumber. Anyone who had considered building their own home was suddenly faced with the option of paying significantly more to build or switching their money over to buying a home that was already built. When the costs became too high, it was easy for many people to choose to buy instead of choosing to build. 

 

Mike Gregor, a real estate broker from Connecticut who has been observing the market for a long time explained,  the average housing cost at the end of 2019 was $245,000 and the current average price is sitting around $266, which is a 9.5% increase. This increase usually takes far more than a year and the housing supply and demand issue is the primary cause. With very little supply and high demand, buyers were engaging in bidding wars over properties that would have sold at cost or below 5 years earlier. To give you an idea of how few homes were available, there was around a 53% decrease in homes on the market during the COVID-19 pandemic.   

What is going to happen now?

 

With vaccine mandates in many different areas, the workforce has started to come back to a physical setting. Many people have been able to save money during the pandemic or they’ve invested their stimulus and suddenly found they have more money than usual. Some businesses who were able to switch to online ordering or cater to the pandemic safety concerns were able to succeed and now find themselves looking to expand. This means that many areas that have been hit hard during the pandemic have come back in full force or better. 

 

masked woman with child

 

The economy has started to swing back up but it’s been hard to keep up with the supply and demand. A shortage of microchips (due to shipping issues along with the rise in purchasing home computers and tablets) put a halt to many auto factories ’ productions earlier this year and there have been many other instances of companies pausing due to supply issues. Even with that pause, the auto industry has continued to thrive with many people discovering that their cars, just like their homes, are not suited to their needs. 

What does this mean for the future of real estate?

 

We have to consider the future of the housing market along with the future of our society and with many variants spreading and cases rising again in some areas, we need to be cautious. If you want to invest in some real estate then you might want to wait until everything starts to level itself out otherwise you might end up with a bum investment.

 

One of the biggest real-estate markets to take a hit is the office market. With the rise in companies switching their employees to working from home, their office space has suddenly become obsolete. Many office spaces have been successfully turned into shared offices where workers can pay a fee to be able to use the office facilities for their own remote job instead of working from their own homes. This is just one of the ways the pandemic has altered the way we look at real estate.

 

If you want to sell your home or property then the seller’s market is still in full swing. Experts don’t predict a “crash” as many people warn about but more of a shift into a leveled-out territory like it was before. It’s difficult to predict it with so many large factories opening up and boosting the value of homes in the area. This is great news for the economy and even better news for anyone who wants to make a move to another state. 

 

What do we do now?

 

The last few years have been difficult for the country as a whole and with many states finally getting their numbers back into safe zones, it’s made it much easier for us to see the light at the end of the tunnel. For the real estate market, this means watching and waiting while the market returns back to normal. New listings and a rising mortgage rate are signs that the market is slowly slipping back into a place where homes can become affordable for everyone and that’s a great future to look forward to. 

 


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