With the pandemic still fully underway, it leaves many wondering how it is likely to affect the housing market. After all, many businesses are struggling to exist while many employees are losing their jobs, experiencing wage cuts and facing a great deal of job insecurity. With so much financial uncertainty, it seems only natural that that housing market would suffer as more potential homebuyers decide to hold off on making a purchase until times are more certain.
Under normal circumstances, employment instability would certainly lead to housing instability and plummeting prices. Of courses, these are not “normal” times. So, how has the pandemic affected housing prices and how is it likely to affect them in the near and distant future?
Analyzing Housing Prices Around the World
There is no doubt that the housing market did see a bit of a drop in certain markets around the world. In the UK, for example, the Nationwide house price index for May showed a drop of 1.7 percent when compared to the previous month. This drop represented the largest decline the market had experienced in 11 years. Since then, however, the market has shown signs of beginning to stabilize ones more. This is largely due to the fact that the entire economy was effectively put on hold while a number of measures were put into place to support businesses and households.
In the United States, housing prices have continued to be on the rise during the pandemic. This can be attributed to the fact that moratoriums have been put on evictions. In most areas, this moratorium has been for 60 to 90 days, but in some areas it has been put in place for as long as six months. This means the immediate problems associated with this issue have been placed on landlords and banks. So, while there may be some troubles down the line resulting from the moratorium, those effects are not currently being experienced within the market.
A Changing Perspective
Interestingly, many experts believe that one of the greatest changes the pandemic is likely to bring is a switch in attitude regarding where to purchase a home. With many working from home during the pandemic and expecting to continue to work this way after it is behind us, a growing number of potential homebuyers are looking to purchase homes further away from towns or city centers. In addition, there is a growing interest in homes with space for a home office or homes with large gardens and outdoor space to enjoy.
Decreasing Office Space
As a growing number of people start or continue to work from home, the commercial real estate sector is likely to see a bit of a hit. After all, if employees are working from home, there is no need to have large office space available to them. As such, the office real estate industry may need to look for ways to adapt. Even so, prices are not likely to drop too drastically as real estate continues to be viewed as a sound investment and purchased even throughout the pandemic.