The COVID Effect On Real Estate
What is the COVID effect on real estate in 2021?
It affected everything, especially our assumptions about where we have to live because of our jobs. Remote work is either the best thing to happen to humankind or…?
Remote work isn’t the only trend influencing the real estate market. Let’s examine the changes in our priorities around “home” and how this impacts the real estate market.
Downtown Real Estate Demand Decreases
One effect of COVID on real estate is that rents and home prices are starting to fall in major downtown areas across the country. And there is little end in sight because of the increase in long term remote work. Major urban areas like New York, San Francisco, and Chicago are already feeling the burn as residents flee from once crowded city centers.
Dense urban centers went from the coolest place to live to a concrete prison with no side benefits. All of that exciting city life? Gone in a poof of virus-induced shutdowns and mandates. I thought I would like an empty DTLA, but it just creeps me out.
Pro Tip: Now might be the best time to snap up downtown real estate. We will get back to living at some point and DTLA could snap back stronger than ever!
Remote and Second Home Areas Increase
People and money are redistributing themselves at a furious rate and that is another effect of COVID on real estate. Home prices are going up in remote and vacation areas, just like they are starting to fall in dense urban ones.
Remote work allows people to make radically different home choices. We’ve never had the chance to think about where we would live if we didn’t have to commute to the old office!
Some of us woke up and realized the mountains or the desert was calling our names. Still others realized that it was possible to move “back home”, even if the home is Podunk USA. And others started exploring places where homes are more affordable.
Suburban Homes Are In Demand
The ‘burbs are ideal for people leaving dense urban cores, but unable to ditch the office altogether. We’ve seen a surge of “hipsters” stalking our La Crescenta (and Sunland Tujunga!) listings as COVID continues to affect real estate priorities.
Not everyone is able, or willing, to completely get out of Dodge. Occasional appearances at the office are still necessary, or one expects to go back once we “recover”.
But the suburban flight of the 2000s is reversing itself and areas like La Crescenta, La Canada or Sierra Madre are seeing demand from buyers who previously deemed us “boring” and lacking global diversity.
Large Homes Are Back In Vogue
Buyers are starting to focus on homes that can accommodate multi-generational living (we added 3 new buyers looking for this in just the last 30 days!) or homes that have a dedicated home office.
The highest infection and mortality rate for COVID occurs in Senior Care facilities. As a result, families are rethinking how they want to care for their elders by looking for multi-generational housing.
On top of that, people just need more real estate space in a COIVD world. If you have kids you know it is impossible to do serial Zoom meetings without a door that closes (and maybe locks).
This is a reverse of a “tiny home” trend I’ve observed in our buyers in the last several years. Instead of looking for the most efficient home possible, people are now looking for one that will accommodate current or future elderly parents or disabled family members.
Pro Tip: ADUs are the RAGE these days and this is a trend that will increase, even post-COVID.
Condos… Not So Much
At the same time, the idea of cramming into a teensy elevator in a condo complex is just…. no.
In fact, some condo dwellers feel boxed in during COVID as common areas and nearby restaurants and entertainment are closed. This means that COIVD is affecting the condo real estate market in a negative way as people move out and fewer people are looking to move in.
Obviously, this will eventually change and it is unclear if condo prices will stay down for long.
Bonus – track the condo market in real-time!
Maybe you are thinking it is time for a change – COVID induced or otherwise. Give us a call or send us a question. We’ve got your back.