When we look at real estate market trends and put together predictions based on existing data, we typically look at how many homes have recently sold, how long they were on the market, how many new listings became available, how prices grow as well as economic trends in employment, etc. As we find ourselves in an unprecedented situation with a global pandemic that has affected every corner of our planet it’s difficult to make assumptions and predictions on where the real estate market is headed, not only for the remainder of 2020, but beyond. There is no doubt that the effects of COVID-19, Coronavirus, will be long lasting and will leave a significant impact on our country that will lead to a “new normal” way of living and doing business. All that being said, that doesn’t mean that the real estate market in Brazos County will come to a sudden stop. In this article we will review how COVID-19 has currently impacted the Texas real estate market, and what our thoughts are on how this pandemic will affect real estate in the long term. My real estate predictions in Brazos County for the next 10 years will share a general overview of how this current global situation will affect the behaviors and priorities of buyers, sellers and other markets that affect our business.
As the whole world is adjusting to life under “safer at home” orders, it’s no secret that housing and real estate has seen a decrease in activity. This is mainly due to the fact that many sellers are anxious about utilizing traditional marketing techniques like open houses and allowing strangers into their homes for showings. Buyers are also more timid about making a large financial decision at an uncertain time when many are working from home, being furloughed or laid off and are unsure of the future of their employment. There have also been situations where homes currently in escrow end up having to push off the closing date because financing terms are changing. The question is how long will this slow down stick around for?
The local real estate market was booming up until now, and the state of Texas has seen five consecutive years of breaking records when it comes to how many houses have sold and median prices. Additionally, no other state pulled as many building permits in 2019 as Texas. This will all change towards the second half of the year, and eventually once we find ourselves on the other side of the pandemic, we will begin to see long lasting effects and a change to the real estate industry and how we do business.
Currently, virtual tours are becoming a very prominent practice when it comes to buying and selling real estate. In a recent blog post we reviewed how new technologies are affecting real estate, and we mentioned that virtual reality will continue to pick up speed and that many realtors will soon be tapping into this trend. Little did we know that just a month later the whole industry would be strongly dependent on virtual tours and video conference calls in order to complete a transaction. The beauty of our business is that it has always evolved alongside technology, and at Brazos County Realty we not only adapt quickly to new trends and technologies, but we aim to be ahead of the curve by learning about and implementing new practices early on.
For the rest of 2020, we can expect to see a continued slowdown in activity until stay at home orders are lifted and people begin to get back to work. Social distancing guidelines will most likely stay in place for a while, which will affect how real estate is sold for the rest of the year. However, we may see an increase in houses listed for sale towards the end of this year as owners reevaluate whether they need to own additional investment properties, or others may consider downsizing in an effort to recoup income that was lost during the stay at home period. According to data and information shared by economic experts, house prices are not expected to drop the way that the stock market did – analysts expect prices to drop a little bit, but to remain steady. Future pricing on properties largely depends on the rate of unemployment and how motivated sellers will be when they are ready to list their homes for sale. Highly motivated sellers could mean that buyers who were waiting for the right time to buy a house and have been saving up for a down payment will be ready to pull the trigger on a purchase, which could also create a scenario for multiple offers and bidding wars if properties are priced to sell quickly. It’s difficult to comment on the immediate effects COVID-19 will have on the real estate market in Brazos County, recovery will likely be gradual as opposed to instantaneous and it is largely dependent on whether the virus will flare up again towards the end of the year.
My real estate predictions in Brazos County for the next ten years are based on what we think will happen once the pandemic subsides. An economic crisis has long-lasting effects on the psyche of people as well as their check books. Buyer behavior will largely be impacted by their experiences during the outbreak, and trends will be dictated by what we have learned throughout this time.
- Buyers will search for bigger homes with more square footage and open spaces. While trendy apartments and small homes seemed to be trendy for a while, many buyers will look to size up and expand their footprint in new homes. Whether this means that floor plans will become even more open concept than before, common living spaces will be more spacious or more walls will be knocked down is yet to be determined. From the COVID-19 pandemic we’ve seen that cities where buildings are built close together and residents live in small apartments, like in NYC, contributed to the spread of the virus, which in turn will lead to buyers searching for more space and distance from their neighbors.
- The cost of construction and development of new projects will go up. We predict that there will be a shortage on building supplies, a slowdown of land acquisition, delays in the permitting process and new constraints and regulations to ensure construction workers remain safe and healthy. A shortage on new construction housing could result in lower inventory, higher demand and in turn drive housing prices up if they fall drastically during the Coronavirus recession.
- Buyers will flock to suburban neighborhoods in an effort to find the perfect place to call home. While the pandemic won’t stop people from investing in real estate in large metropolitan areas like NYC, it may encourage buyers to seek out less dense cities where neighborhoods are more spread out and homes are larger. We’ve experienced a shift in how we do business and many people have been forced to transition to work from home remotely. This means that many people may decide that they don’t need to live in a dense urban setting, and while all of us are currently craving human interaction more than anything buyers will begin to favor suburban settings over a densely packed urban hot spot. Additionally, since many people are working remotely, they might not consider travel and commute times as much as they previously did when looking to buy a new home.
- Outdoor living spaces & home offices will become a must-have for buyers. We’ve all been forced to take a crash course in working from home, which means that upgraded home office spaces and decked out backyards will become the newest must-have amenity. Balconies and private decks are already prized amenities for those looking into buying apartments, and after being stuck at home for a prolonged period of time buyers may realize that a nice outdoor space is a priority on their list of wants and needs. Home offices will also become a more standard offering, which means buyers may look for homes that offer more rooms and square footage to accommodate this space. Whether families continue homeschooling or both parents continue to work remotely, a nice home office will be a necessity in our new normal.
- The idea of what “home” means will change. After spending months at home people are truly beginning to recognize the value of their home and how much it matters. During the global pandemic our homes transitioned from a shelter to the place where we eat, sleep, play, work and learn. Buyers will be attracted to properties that offer various amenities and upgrades that make staying at home more convenient, exciting and entertaining.
We find ourselves in truly unprecedent times, which makes it very difficult to make predictions about the future. What we can say is that the real estate market has successfully withstood and overcome more difficult economic situations. Even though the immediate future is uncertain we are confident that the Brazos County real estate market will remain strong and resilient and that our team will provide top notch service to all of our clients. Please contact us if you would like to discuss a home evaluation or if you have questions about buying or selling real estate this year.
How Are New Technologies Affecting Real Estate?