Renting and Selling Residential Real Estate
The real estate market in the United States has been hit considerably by the COVID-19 pandemic. Although it is now on the road to recovery, investors have seen several changes in comparison to how the market was prior to the virus outbreak and resultant lockdown.
The Rental Market
An estimated 44 million American households live in rental properties. However, unemployment and an economic recession in the country has led to low rent collection since April. The mortgage and rent payment breaks given to citizens by the government in the form of coronavirus rent relief have now stopped, and tenants are expected to resume monthly payments. It has been predicted that there will be a significant increase in homelessness due to people not being able to afford rent and hence, investors will also face financial losses.
Despite a surge in unemployment and incredibly low economic activity over the past few months, rent prices as well as home sale values have remained more or less the same since the COVID-19 outbreak in the country. Investors are more focused on reducing vacancies and preserving their occupancy rates. However, it is inevitable that if tenants are unable to make payments after the eviction bans are lifted, they will be forced to move out.
The Selling Market
While the rental market seems to see a bleak foreseeable future, the residential property selling market portrays a different scenario. Although interest rates have hit rock bottom several times during the pandemic, new listings have continued to enter the market. During the first several weeks of the coronavirus outbreak, there was a severe shortage of inventory which then pushed up the prices of residential properties. Resultantly, sellers became more willing to find buyers and hence entered the market once again.
Moreover, some sellers are not willing to negotiate or reduce selling prices due to the uncertainty presented by the pandemic. On the other hand, other sellers want to sell their property as quickly as possible and have accepted much lower prices than they would have accepted before the pandemic. In a study conducted by Gallup, only half of the American population believed that it was a suitable time to purchase a home and were hesitant to enter the market. However, incredibly low interest rates and an increasing supply of properties led to it becoming a buyer’s market, and attracted a large number of potential investors.