The effects of the COVID-19 pandemic continue to impact various aspects of the economy, and the real estate sector is not exempted. While to some, things look undisturbed in real estate, to others, it is a different scenario.
The market continues to experience significant shifts and innovations, such as repurposing buildings becoming feasible. Also, real estate property prices continue to rise in some areas, with the emerging buyer demographic comprising millennials taking over property ownership.
Below are some of the recent market trends in real estate to look out for to understand the general feeling among buyers and sellers.
Digital House Hunting
Real estate trends, including the Kensington real estate trends, reveal a shift from in-person to online house hunting. With the pandemic disrupting physical meetings, house hunters and realtors took advantage of the online space to meet and seal deals.
Some online research proves that some home buyers even bought their premises without ever stepping into the premise, thanks to virtual capabilities like doing Virtual staging, Drone Videos, and 3D tours..
A Shift from Cities To Suburbs
Another significant impact on the Santa Monica real estate trends is the shift from major cities to suburbs. While the pandemic is almost over, major towns may take about 3 to 5 years to rebound from these shifts.
The shift from towns to suburbs can be linked to necessity and choice. Most firms downsized due to the pandemic, resulting in the loss of jobs. No wonder individuals can no longer sustain city life.
While you will still incur costs living in the suburbs, the lower taxes and affordable housing and rent make them attractive to low-income families struggling financially.
A Drop in Mortgage Rates
With the overall drop in economic performance, a good number of people shied from buying homes resulting in a decline in mortgage rates. While these rates dropped before 2020, they hit their lowest record in early 2021, spiking more applications. The Federal Reserve maintained low rates to shield applicants from the pandemic’s impacts.
Increase in Home Prices
Santa Monica, real estate trends report an increase in home prices. This is basically due to the demand for single-family homes as of 2020. The demand continues to increase in 2022, hence the home prices.
As home prices continue going up, home buyers are not intimidated, with some willing to pay up to double the asking price to secure their purchase.
A Decline in Rental Property
In 2020, the rental market reported a decline, partly due to the shift to suburbs. This decline is expected to continue with individuals who can afford homes opting to buy instead of renting. Millennials have also given up their homes and moved back with their parents, further declining rental property demand.
The decline in the demand for rental property favors the suburbs, creating real estate opportunities. On the other side, realtors can take advantage and buy vacant homes in anticipation of increased prices when the pandemic ends. These investors can also repurpose retail buildings and hotels and convert them into housing units for rental.
As the pandemic shifts the global lifestyle, more people will likely move to the suburbs as it is affordable. This will increase the demand for single-family houses over the years. On the other hand, the low mortgage rates due to low demand in major towns will hopefully increase demand for housing in the future, even though a few people can afford it now.
In the meantime, the real estate market in the large cities will remain affected, but as investors take advantage of the available rental properties, repurposing and waiting for the market to stabilize, we can remain hopeful that the market will take shape post-pandemic.