Photo provided courtesy of Unsplash.com
By Elizabeth Fitch, Feature Editor
When asked how he envisions the real estate market will change over the course of the next few months, Sam Chaudhry, real estate broker and managing partner at Remax, confidently stated, “real estate is still on fire.” [1] While the market has certainly shifted as a result of the coronavirus outbreak, the anticipated collapse has not hit as hard as it has the rest of the country’s economy. That being said, as of now, the future of the market still remains uncertain. [2]
Interestingly, an unaffected market in times of severe economic stress is not unlike recent history. Looking back, home prices rose nearly seventy-five percent from 1997 to a peak in 2005, seemingly unaltered by the 2001 U.S. recession and the steep stock market decline of 2000 to 2002. [3] This lead to “delusions of eternal price increases for houses,” which were thought to be much more reliable than stocks. [4] Now, despite the pandemic, this mentality remains the same. Although the market varies by state, housing prices have not dropped considerably. [5] The question is how real estate can be thriving when so many other businesses seem to be falling apart.
The answer? At first glance, demand and value. Those who have lost their jobs are looking to sell their house and downsize. On the other hand, some see working remotely as an opportunity to upgrade to a larger home in a nicer area – something they may not have thought of when tied down to an office environment. [6] One way or another, demand is out there. Furthermore, for many people, the value of a quality family home cannot be quantified. [7] If you are able to afford the cost, a family house that you will live in for years to come may be worthwhile, irrespective of any short-term shifts in the market. [8]
Of course, the pandemic is not over yet, which means the market still has time to change drastically. HouseCanary CEO Jeremy Sicklick explains that he has adopted a wait-and-see approach, watching for the measures Congress and state governments adopt to support the economy. [9] “The question will be which housing markets are going to be experiencing issues and which ones will come through less scraped,” Sicklick says. [10] For example, with less tourists visiting the service-oriented Las Vegas market, housing prices there will be affected more than markets like Pennsylvania’s. [11]
Specifically, in Pittsburgh, demand is high. Though the pandemic cancelled open houses, showings and some home inspections for months, the process quickly went virtual, allowing people to buy a house entirely sight unseen. Even more encouraging, mortgage rates are near historic lows and months of stay-at-home orders have intensified demand while local housing inventory remains low, creating a seller’s market. Statistics also show that millennials are currently the fastest growing segment of home buyers. [12] When it comes to buying a house, this age group is seemingly unaffected by the pandemic, as they are younger, more technologically savvy, and more receptive to virtual house tours. [13]
“We’re anticipating a summer of people coming out of their houses and really wanting to create a home that makes more sense for them—for their kids to learn at home or having two people work from home,” said Kelly Hanna Riley, vice president of residential sale at Howard Hanna Real Estate Services. [14] “Before the pandemic, no one thought about those things… People are really looking to have a life-work balance at home that I think could be really refreshing for everyone. It’s a silver lining that comes out of tragedy.” [15]
[1] https://www.vox.com/the-goods/21300939/coronavirus-real-estate-housing-sales
[2] Id.
[3] https://www.nytimes.com/2020/07/31/business/housing-market-prices-risk.html
[4] Id.
[5] https://www.vox.com/the-goods/21300939/coronavirus-real-estate-housing-sales
[6] https://www.vox.com/the-goods/21300939/coronavirus-real-estate-housing-sales
[7] https://www.nytimes.com/2020/07/31/business/housing-market-prices-risk.html
[8] Id.
[9] https://www.forbes.com/sites/dimawilliams/2020/07/17/with-coronavirus-on-the-rise-again-is-the-housing-market-weakening/#2d81c31c4c4c
[10] Id.
[11] https://www.vox.com/the-goods/21300939/coronavirus-real-estate-housing-sales
[12] https://patch.com/pennsylvania/pittsburgh/millennials-are-changing-pittsburgh-us-housing-market
[13] Id.
[14] https://pittsburghquarterly.com/articles/pandemic-heats-up-housing-market/
[15] Id.
