The Coronavirus has touched all aspects of everyday life, inspiring fears both of economic instability and the outside world in general. It was a particularly challenging and uncertain time for the real estate sector, with the current pandemic reshaping high-level market forces and the ground-level process of buying and selling properties.
This article demonstrates how real estate agents have dramatically increased their process of showing and selling houses during a period of greater caution and restricted movement. This process involves everything from improved cleaning before and after exhibitions to restrictions on touching certain utensils, countertops, and appliances. Potential buyers are sometimes required to pre-register instead of open houses so that sellers and brokers can gauge their interest in buying and make sure they feel healthy enough to come. The fact that suppliers are increasingly closed at home also makes it challenging to organize visits.
How does the Coronavirus affect home sellers?
According to data from the New York metropolitan area company Halstead Property, cited by the Times, there were only 3,900 exhibitions scheduled (not counting many cancellations) for March 14-15, instead of the typical 5,500 to 6,000. In some cases, pre-filmed video tours or FaceTime fill the gap. But some, like Kathy Braddock, managing director of NYC for William Raveis, recognize that this has its disadvantages: “Obviously, being able to see the property is the best way to see it,” he told the Times.
These statistics appear to follow the subtle changes in buying and selling behavior observed by an instant survey of more than 70,000 residential members of the National Association of Realtors from March 9 to 10. Although most members have reported no change in buyer and seller behavior, so far, 9% say they have seen an increase in sellers as a result of favorable interest rates they hope to take advantage of when selling quickly and then moving.
However, buyers seem less optimistic. Thirteen percent of all NAR members noticed a decrease in buyer interest in a given market, and another 3% noted a significant decline. These declines took place in Washington (16% decline, significant 3% decline) and California (16% decline, significant 5% decline), two of the emerging epicenters of COVID’s West Coast cases. This disparity of interest may create a favorable climate for buyers, but it is too early to know which direction the situation will take.
The lack of certainty surrounding the situation has encouraged some significant commercial real estate agents to stop their acquisitions for the time being. Origin Investments “indefinitely postponed” $ 241 million in apartment building companies, for fear of overpaying in a declining market.
Given that the scope of the pandemic and the nature of government responses to it appear to change virtually every hour, it will be difficult to predict exactly where things are in the housing market. With Fannie Mae, Freddie Mac, and HUD announcing a moratorium on all foreclosures and evictions until the end of April, the situation could stabilize before something drastic happens. Still, the only thing you can count on at a time like this is to expect the unexpected.
What does Coronavirus mean to investors?
The novel Coronavirus 2019 (2019-nCoV) has spread to 74 more countries, in addition to China, with more than 92,000 confirmed cases. The death cases are 3,130, and 48,451 are the recovered cases (on March 3, 2020). The coronavirus outbreak seems to be on everyone’s mind, alarming public health officials, and scaring global stock exchange.
China’s importance in a globalized economy has increased dramatically since the 2002-2003 Severe Acute Respiratory Syndrome (SARS) outbreak, the most apparent precedent of the current crisis that originated in Guangdong province in China spread to more than two dozen countries. So, China represented less than 4% of world GDP; Today, China is the second-largest economy in the world, currently representing 16% of world GDP and contributing 24% of world imports.
Therefore, disrupting production at Chinese factories and disrupting global supply chains across China will inevitably have a ripple effect on international business, the world economy, and global growth. There are also concerns about the consequences of the United States, the world’s largest economy, being forced to implement a blockade similar to that imposed by Chinese authorities.
As the new COVID-19 coronavirus strain goes far beyond China’s borders, it is difficult to fully assess the extent and severity of investment risks. As Coronavirus spreads, so does the fear of financial collapse. This fear is causing a lot of sales and a lot of losses.
Notably, global stock markets have fallen since the first announced on January 11.
- Although the only confirmed case of Coronavirus in Nigeria remains the Italian citizen index established on February 27, the country cannot remain unharmed by events in China, Nigeria’s leading trading partner.
- Markets don’t like uncertainty, which is why investors are understandably nervous about the spread of coronavirus disease. We are not sure how far the virus has spread and how long it can last; how much fear inhibits travel, consumer spending, manufacturing and commerce, and public health institutions’ ability to prevent the spread of the virus. These uncertainties have led to increased volatility in the stock market, as investors rush to adjust their portfolios to explain the potential for virus damage in the global economy and assess its most significant asset price impact.
An important question that every investor should strive to answer is: Is my investment short or long? Another is: is there evidence linking global epidemics to the fundamentals of long-term investment?
There is no reason to be alarmed.
Previous experience shows that, in general, outbreaks tend to have temporary impacts on markets and economies. Markets have little memory of epidemics. Markets may initially react to uncertainty, but global stocks tend to recover after a temporary slowdown. Furthermore, this is not the first new virus we have seen, and it will not last. SARS, Zika, H1N1 flu, and others have come and gone.
Now is not the time for an instinctive reaction, as global efforts continue to combat the coronavirus epidemic. Temporal phenomena and markets go through cycles like this. Viruses fizzle out, and investors will return to corporate and economic fundamentals. One of the most important things an investor can do in the face of market uncertainty is to ensure that investment portfolios are at the right risk levels. Market volatility helps to generate wealth over some time. For investments with shorter terms, these investments already have a low level of risk. Shorter terms isolate it from market volatility, whether related to disease outbreaks or not.
Things investors should take note of
Investors should be alert to scammers who try to take advantage of our natural emotions of fear and greed during this period of uncertainty. There were spikes in investment opportunities with incredible returns and schemes to get rich quickly. At the risk of sounding like a broken record on this subject, there are no things or strategies to get rich instantly when it comes to investing.
While it is unclear how many people will be affected by COVID-19 or how many weeks or months it will take to run its course, if right for similar epidemics, it will continue. Standard recommendations for preventing the spread of infection include washing your hands regularly, covering your mouth and nose when coughing and sneezing, cooking meat and eggs well, etc. Also, avoid close contact with anyone who has symptoms of respiratory illnesses, such as coughing and sneezing.
The coronavirus impact on the real estate industry
Most likely, the world will return to normal. From SARS to bird flu and Ebola, there always seems to be some kind of fear that we think will change the course of our existence. Fortunately, in a few years, we will be able to place the Coronavirus in the category of other “close calls.” But this one looks different. And it’s already changing our lifestyle in a dramatic way that previous health problems haven’t.
This week, the NCAA said it would celebrate March Madness without crowds, SXWS canceled its annual event, the Coachella Festival announced it would postpone. Google told its more than 100,000 employees to work from home. Countless other companies encouraged their employees. Teleworking and toilet paper has become a scorching product. Although the real estate sector as a whole appears (at least so far) not to be affected to the same degree as the travel and entertainment sector, what impact can we expect Coronavirus to have on the real estate sector over the next few years?
The answer, of course, depends on several factors, such as how quickly the outbreak spreads, the duration of the epidemic, and the actual impact of the Coronavirus on humans since we can analyze the data for the inevitably larger sample size that is. Make sure you get it. Even if the Coronavirus comes out tomorrow, the impact on the real estate sector can be significant.
Teleworking has undoubtedly gained momentum in recent years. However, with more and more employers encouraging their employees to work from home during the outbreak, employers are getting an unexpected preview of what a significantly smaller office area will look like in the future. Technology companies like Zoom and Slack are becoming the center of attention as companies try not to lose anything with their employees working from home. If technology companies can facilitate an out-of-office work environment that will deliver results for employers during this outbreak, expect demand for smaller footprints to accelerate as a result of the Coronavirus.
On the other hand, the demand for shared workspaces can decrease significantly. People try to avoid interacting with others in the office environment, so the appeal of the concession space in a collaborative work environment may diminish. Collaborating workspace operators will need to innovate to retain and attract new tenants.
Any discussion of the Coronavirus usually includes recommendations for social distance. In simpler terms, health experts suggest that avoiding crowded areas can be a useful tool for preventing Coronavirus. If the general population follows this advice, the immediate impact on the retail sector could be significant, as people avoid supermarkets, malls, and malls.
But what does that mean in the long run? People still need food, clothing, and other essentials. And of course, they want different needs. More and more people use Amazon and other online services to shop at home. But there is still a vast untapped market for people who have never used online shopping. There will be a significant number of these people trying to buy online for the first time as a result of Coronavirus fears. This will be a turning point that forever changes some physical stores and how they accommodate the online consumer. As domestic and domestic deliveries increase in popularity, retailers need to consider store size, design, and collection points when designing stores.
The industrial sector will also feel the impact of the coronavirus outbreak, good and bad. If online shopping becomes more frequent due to the Coronavirus, more industrial space will be needed to house inventory at distribution centers. However, larger industrial areas are likely to mean more employees close to each other, so employers should know how it will affect their operations during future outbreaks of the next primary virus.
The coronavirus outbreak led to a sharp drop in US Treasury rates, which reduced interest rates on home loans. Many borrowers already in the process of refinancing existing loans will reap the benefits of these lower rates. If rates remain low, more borrowers will rush to refinance and set prices at historically low levels.
Although the Coronavirus does not appear to have a significant impact on the real estate sector, a closer examination suggests that it can have a far-reaching effect. From the office to retail or industry, expect the real estate industry to see significant changes, regardless of whether the Coronavirus is short-lived or gets here.