Possible Post-Pandemic Boom For US Real Estate
Real estate has been a strange industry when it comes to the impact of COVID. For some, it's suffered more than other sectors because of unemployment, failure to meet rent, and regulations to evictions in some countries.
However, others might argue it's gotten better. Innovations like digital adoption (i.e., virtual tours, remote building audits, and other software) and incentives to buy instead of rent provide a more positive picture. We also can't forget about remote working, government rent aid, and more.
Now, we can't really declare one of the two extremes as a winner. The real extent of the damage and upend for the real estate market is more of a grey area. That's because not all markets have suffered the same damage, and the same is true for reaping the benefits we mentioned.
However, experts have pointed towards a few promising markets after the pandemic.
Which Markets are Likely to Benefit the Most?
MarketWatch's article on US real estate post-pandemic has fascinating insight on the topic. Their observations of the initial concerns about COVID in real estate against today's expectations might shed a light of hope on those companies worried about their profitability
Interestingly, the initial health concerns actually fuelled many of the innovations that benefited the industry. These innovations include virtual tours, digital purchases, and vital updates for real estate management software.
We also have to point out other trends, like remote working. Strict lockdowns meant workers had to transform their homes into offices. This led many people to reassess where they wanted to live. It mostly resulted in a popularity increase for otherwise uninteresting sectors, like vacation towns. Wealthier people also decided to invest in secondary homes.
Additionally, lower mortgage rates incentivized many Americans to move from large cities to lower population towns and suburbs.
With that in mind, we'll break down the article's four main markets signalled by MarketWatch as the most promising ones in terms of growth. Make sure to keep an eye out for these investments next year.
Coastal Markets
Firstly, formerly expensive markets, like New York, have experienced dramatic decreases in pricing. These significant housing markets have been going through a pricing decline for three months now. Therefore, it's easier for Americans to consider these investments.
San Francisco is another market that's quite similar to New York in this regard. People were already reconsidering living there because of rising prices. It simply wasn't affordable for lots of people. The pandemic simply gave the last push to nullify most of the reasons people have to live in large cities: nightlife, live events, and the like.
Why are these markets promising, then? Lower demand, combined with decreased mortgage rates, can make them prime for an upsurge. People who previously didn't move to these cities might have enough reasons to do so as the pandemic subsides.
Tech Hubs
Markets with attractive tech development will become vital for companies and workers as operations return to normal. Commuting times and housing prices tend to be more comfortable for these markets as well.
It's also worth noting that these markets are already promising during the crisis. That's because of how quickly businesses have had to adapt to innovation. Therefore, they're unlikely to lose their popularity, especially as other tech hubs become more attractive.
While Silicon Valley is the primary reference for the tech scene, markets like Idaho and Denver are cheaper alternatives. They're also offering a growing scene to drive more interest. Additionally, many companies are likely to keep remote shifts, thus making these markets unlikely to lose interest.
Small Cities, Prime for Remote Work
However, not all markets come from large, formerly expensive cities. Smaller locations have always been a favorite for Americans looking to save some money on rent. That's still true, and they're even more attractive because of current approaches, like remote work.
Many companies will remain with, at least, partial remote shifts for their employees. Not only does it offer more safety, but it's also practical—commuting and logistics related to transporting employees to provide funds that could be invested elsewhere for better returns.
That means that working in affordable houses and smaller cities is even more advantageous. Workers won't have to juggle housing affordability against employment chances. Therefore, these markets might experience an increase in demand, along with pricing.
Real estate investors have already taken a liking to these markets. Buying second homes in smaller cities is a lot more comfortable when it's also possible to work from there.
Possible Surprises
The last entry on the MarketWatch article included several markets that might catch many investors by surprise. It's actually a summary of Realtors' top market list after COVID. While several of those markets are easy to expect, others definitely aren't.
Iowa and Indianapolis are great examples. They're rarely seen as hot markets, but migration from the western region and coast is likely to drive lots of traffic into these states. Naturally, it's easy to explain how that doesn't mean it's 100% sure to occur. However, It shows a lot more promise than in the past.
Of course, it also depends on workforce diversity and market needs. Lacking job diversity is an easy way to lower the value of a market like it's happened in countries with heavy reliance on tourism.
While cities like Houston and central Florida have done well, as was expected, other contestants are posing an interesting chance. For instance, cities from the Rust Belt and the Midwest still offer solid workforce diversity while combining them with great prices.
What do we Think?
Remote work is likely to remain popular as companies realize the benefits of this strategy to reduce expenses and guarantee employee satisfaction. Therefore, tech hubs and cities with more affordable housing are likely the best investment opportunity right now.
As the COVID crisis starts to subside, more people will realize how these sectors' benefits are more prominent and easier to reap. Therefore, these markets are barely starting to grow, posing an ideal investment for the long-term.
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