As the world welcomed 2020 with high hopes, the early signs of a health shock that is Coronavirus has caused panic in China. Fast forward to the middle of first quarter, the disease has spread in various countries including the United States. No one knows when and how the virus will be precisely contained since it currently doesn’t have a direct cure. As a result, industries particularly real estate/the housing industry get rippled with mostly unexpected ramifications. Due to Coronavirus, volatility is widespread and this leads to possible tough times ahead for the housing market in the U.S.
Updates of the Epidemic
As of March 10, 2020, there are a total of 116,458 cases that have been listed all over the world. 4,091 of the patients died, and 64,750 recovered. The U.S. has a total of 729 cases which include active cases, total deaths, serious or critical conditions and total recoveries. Out of over 700 cases, only 15 individuals have recovered so far.
The U.S. also ranked eighth when it comes to the number of Coronavirus cases in the world. By the rate that it’s spreading, it seems there’s no stopping the epidemic at present. No declines in transmission have been reported, causing people to be even more concerned.
Travel and major events have been postponed, as either cautiousness or panic took over. These circumstances translated to an increase or decline in purchases, affecting major industries. These include health, tourism, logistics, transportation, and manufacturing among others. Eventually, it wouldn’t be a surprise for the housing outlook to change. Before the Coronavirus has hit the world in late 2019 to the onset of 2020, price fluctuations and state-specific inventories were more predictable. No one could have seen the virus coming, hence investment trends shifted into panic and safety mode.
Changes in American Behavior in the Housing Industry
Typically, homeowners make purchases depending on a life phase. Roughly 10% of Americans move every year for a couple of reasons. These include change in family sizes for childbearing couples, job-related relocations, people transitioning to be empty nesters, and seniors moving to retirement communities.
Given the unknown scope of Coronavirus’s spread in the long run, only educated speculations can be overall made on how residential arrangements will be affected. For instance, will home care assistance apply stricter measures when it comes to senior care? Since the older population are more vulnerable to sicknesses, loved ones of senior patients will have higher standards when it comes to considering services. How can home care establishments further assure patients and potential residents that infections will not reach them and their families?
During Q1, most of the cases were found in the West Coast. This means those who got job relocation offers in applicable areas could think twice of whether a transfer is safe. Potential home buyers might hesitate from taking on a job or settling in California, New York or Washington. Most of the virus’s patients are found in said states and all three as of March 10, 2020 have 166, 173 and 136 cases, respectively.
Hundreds of cases leading to panic and extra caution can lead property management firms to think of ways for their businesses to survive. Mortgage rates were known to drop much lower than forecasted, and discounted prices may not even be enough incentive for buyers to grab their offers.
An Opportunity for Aggressive Buyers
Out of all the mass panic, residential real estate services need not fret about the virus’s possible effects in their industry. As what Chinese military strategist Sun Tzu said, “In the midst of chaos, there is also opportunity.” This ancient nugget of wisdom can be translated to the real estate market. Because mortgages are lower due to much lesser home purchases, aggressive investors can buy more properties located in affected states. For example, homes in California or Florida become more attractive investments since they’ve been priced for much less. From the perspective of what seems to be an aggressive and fearless investor, Coronavirus will hopefully have a cure or be contained within the year. By the time virus-related panic blows over, they would have made the most of their low-priced housing deals.
Even seemingly conservative homebuyers can take advantage of lowered mortgage rates. They too, can give the aggressive approach a try. Coronavirus is related to the respiratory illness called Severe Acute Respiratory Syndrome or SARS. SARS was a major cause of alarm in 2003 and was contained by the CDC in less than six months since it reached the U.S. soil. As a relative to SARS, it’s may be possible for Coronavirus’s containment to have the same timeline. This means with a lower mortgage deal, homebuyers can at least be optimistic that states with most cases will eventually be much safer in the future.
Possible Bottlenecks in Home Design and Construction Supplies
The fact that U.S. imports billions of dollars’ worth of goods from China is almost common knowledge. In 2017 alone, about $506 billion in materials were imported from the oriental continent. Aside from global tariff restraints and other trade issues, Coronavirus is starting to be the biggest bottleneck among major industries from following their production schedules.
Prospective homeowners and realtors may then ask, how are U.S. imports and Coronavirus going to affect the real estate industry? The answer is simple: When a house gets purchased, it’ll need upgrades and upkeep. Enter suppliers which normally require contacting a design build firm or choosing among electrical contractors.
If any potential customer gives either businesses a call, they’ll most likely have the willingness to provide their services. However, the question is, do they have building and electrical supplies enough to cover for their area’s customers within the next six months? Even if they do, the market for industrial items can get pricier due to extra layers of logistical and sanitation protocols. It’ll certainly be a challenge for them to keep their costs low while making sure to deliver projects within agreed deadlines.
The same concern can also apply to residential roofing businesses. Metals, asphalt, and steel are just a few of the industrial items that are imported and were speedily distributed before the spread of Coronavirus. Residential painting materials can also be affected by logistical bottlenecks relating to extra steps taken in ensuring safety from the virus.
As home design and construction possibly face international bottlenecks in supplies, it’ll be tough for real estate sellers to beautify their units. Potential home buyers might also be faced with higher service rates from suppliers because of difficult-to-procure industrial materials. Nobody saw the viral outbreak coming, so it would’ve been impractical to have ordered supplies ahead of time. Despite a generally lower mortgage rate, house investors must then find a reasonable package for their properties’ construction.
What Can We Hope for?
As earlier mentioned, Coronavirus is a disease that’s closely linked with SARS. This means there’s a possibility for it to be eventually contained (hopefully very soon). Recently, officials from Massachusetts have announced their intention to have a $15 million budget towards safeguarding from Coronavirus. This will be one among many more of the country’s initiatives in countering the epidemic.
When all the panic subsides, U.S. industries will pick up the pieces of trading landscapes. The health of various businesses, including real estate, will hopefully stabilize. Right now, the world’s future trade adjustments can be forecasted from the SARS model. After its containment in 2003, decision makers found themselves trading once more.
A look back in world history shows constant proofs of economies bouncing back from plagues or outbreaks in varying degrees. It’s safe to assume the U.S. real estate market will also find its way to eventually being lucrative, even in states which currently have hundreds of Coronavirus cases. This may be too soon to say since the epidemic occurred just a few months ago. However, for those who are on high alert or experiencing extreme panic in various industries, the hope of restoration helps them achieve balance in perspective.
Scientists and health organizations are also on a constant search for cures and solutions. If outbreaks were contained in the past, there are higher chances for this virus’s rate of spread to be minimized. In the meantime, vigilance and keeping one’s ears to the ground are viable approaches to cope with the U.S.’s current condition. There are varying opinions, speculations and updates available for housing investors. Be in the know of trends and see how related sectors are currently adapting to the rising cases of Coronavirus.
What Can Businesses Do?
While there are a lot of speculations about the outcome of being plagued by the Coronavirus, it’ll be wise for businesses to readjust their forecasts this year. A good question to ask is, have they placed enough cost and operational buffers for extreme situations? Will they also have the capacity to stay afloat and stay in the black, short and long term wise? While nations are experiencing various effects of the virus, it’ll be necessary to estimate how much trading capacity and resources they’ll have to survive during the quarters one and two of 2020.
Whether they belong in real estate, logistics, health, construction, or any other industry, what also matters is to possess ethical responsibility. There are entities that unjustifiably bank on the demand for even the most necessary consumer goods, such as face masks, soaps, and hand sanitizers. When customers are into panic buying mode, it wouldn’t be kind for businesses to piggyback on people’s fears. It’ll even be more important for them to put their foot down in responsibly offering their services.
For instance, if a real estate agent is consulted by a potential homeowner in a high-risk area, it’s even more imperative for them to be realistic with facts. Chances are, house buyers would have researched about the area too. One way or the other, the truth will be found and it’s good to side with ethicality. Trust goes a long way in real estate, so agents or property management advisers can best help each customer by showing the reasonable pros and cons of a property. Word of mouth travels fast and truthful testimonials are solid proofs that can build on the brand of their businesses.
Homebuyers Must Be Extra Wise with their Decisions
There is a lot of hearsay when it comes to Coronavirus cases. Most times, it can even get confusing to keep track of the latest news about the epidemic. Authorities, stories, and features are all over, with every attempt to keep readers informed. Various speculations are as indefinite as the virus’s methods of containment themselves. This is why it’s wise to stick with major trustworthy sources, such as the Center for Diseases and Control and Prevention or CDC. They frequently update their site, especially when it comes to the Coronavirus.
By basing on government authorities’ sites and announcements, you can also gauge which areas will be at high risk of the virus. This way, you can make better investment decisions in the long run including your housing options. If you’re currently prospecting on a property purchase, you may also see what adjusted offerings are out there. These include lower mortgage rates.
Since purchases may be fewer in the coming few months, it could be a buyer’s market in housing. You’ll have more properties to choose from, and certain units could even be for sale at significantly lower prices. Gather as much credible information as needed so you can make a wise decision.
Caution and Hope for a Better Market
There’s no telling of when the epidemic will eventually subside. Because of this, panic among major industries and sectors have rippled out affecting other markets like real estate. Given speculations and estimated effects of the disease, the real estate market can brace up for tough times ahead. It may be best to approach with cautiousness and optimism for possibilities, especially when the U.S. eventually witnesses the tail end of Coronavirus in the future.