Investing in real estate involves purchasing, owning, and managing property for either rental or sales. Historically speaking, many find this business a strategy to build wealth. In the US alone, home equities have gone up to over $6 trillion in just the past decade. In 2019, 682,000 newly constructed homes were sold according to the US Census Bureau, and 5.34 million existing homes were sold based on the data from the National Association of REALTORS.
But how is real estate affected by covid now that the pandemic is still a threat to everyone? Has the real estate market been affected by covid?
With the prevalence of covid cases across the globe, many businesses have temporarily closed and a lot have permanently shut down. Only a few industries managed to cope up with this pandemic struggle and one of them is the real estate industry. Despite the hard hit of the pandemic to all nations and all industries, the real estate business was not as badly affected compared to others. The need for residential and commercial properties is still on the rise resulting in the continuous booming of property management. According to the US Census Bureau and US Department of Housing and Urban Development, the October 2020 report shows a total of 701,000 new houses sold. This number is higher compared to the same data a year ago.
Housing prices according to location
Pricing in big cities such as New York and San Francisco significantly declined to about 19% after the pandemic hits America. People started leaving the cities and moving to suburban and rural areas. The reason behind this is both to avoid contagion and higher opportunity for remote work. These factors have increased the home sales in distant areas most especially because analysts believe that the work from home setup will continue even after the pandemic.
Phoenix, Charlotte, North Carolina are some of the less populated cities and they have seen their housing pricing holding up fairly well. Most people also find it better to live in their hometowns than in the cities for good. According to them, it is less stressful to be in a familiar neighborhood and which makes them more productive.
Vacation Rentals
As more people are fleeing from the cities, vacation rentals in remote areas are also gaining steady sales. This is because some vacation properties have been rented for a long term and high demand also brings pricing at a fairly competitive level.
In August of this year, the overall percentage of vacation rental occupancy is already at 81% of the 2019 rate. The state of Georgia is already at 119% and Mississippi at 114%
Is now a good time to invest?
As the saying goes, when times are bad, make money on equity and when times are good, make money on finances. This pandemic offers the opportunity for both. The housing market is still at blossom amidst covid and can be seen in the increase in property sales. Regardless of any circumstances, people will still need a place to stay so it is not an unwise decision to own a property to either rent out or sell.
Final thoughts
Investing in any form is not a get rich quick scheme. The same goes for the real estate business. Any form of investment should be viewed from a long-term perspective. Whilst our current scenario is not comparable to any other past events, history has shown what the real estate industry offers.