The COVID-19 pandemic has affected how we live our lives, which strongly reflects the real estate market. It’s changed what kind of houses people want to buy. Also, the real estate market has been booming during this time, though the future will see a drop in the percentage of homeowners- down to 62.1% from 65% over the next two decades, and younger generations will see the decline more sharply. Let’s further break down the ways the pandemic has impacted the real estate market.
A Different Way of Living
As we’ve said before, the pandemic has affected how we live our lives. Before, people would often seek out larger homes in busy areas with many restaurants and amenities close by. This naturally meant that homes in cities were popular and came at a high price. But now, people are thinking about how they want to live rather than where. They’re seeking smaller homes with plenty of outdoor areas so they can social distance comfortably. It also helps that these homes often have lower taxes and fewer regulations, and more importantly, fewer lockdowns.
Prices are Soaring
Because of the pandemic, fewer people have been selling their homes while more people are looking to buy. This disparity between supply and demand has driven prices way up. The total worth of US homes has gone up 3.1 trillion dollars in a year, and that number will rise as real estate agents are encouraging buyers to overbid and even bid on properties sight unseen. There’s also been a growth in demand for second homes as people who live in the city want a getaway in case of other lockdowns.
While the real estate market is enjoying a boom right now, the rise in prices and the shrinking inventory means that the percentage of homeowners will decline in the future. Millennials will likely have a homeownership percentage of 64% while boomers had 72%, and Generation Z will probably be even lower. While COVID-19 isn’t the cause of these trends, it has undoubtedly exacerbated them, so real estate agents, as well as home buyers and sellers, should prepare for an uncertain future.