In 2020, the pandemic brought chaos to a real estate market that the industry already considered turbulent. Two years after Covid-19 entered California, those market changes may remain for the foreseeable future. Below, C21 Peak takes an in-depth look at those permanent housing market changes and their implications.
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The real estate market commonly experiences upheaval because of economic instability, political disturbance, or stock market crashes. However, buyer and seller behavior usually returns to normal after those major events subside. Surprisingly, the COVID-19 pandemic may impact the market with more permanence.
According to data from the Pew Research Center, many Americans now telecommute by choice rather than necessity, despite their workplaces and offices reopening.
Almost 60 percent of workers surveyed in January 2022 who indicated they could work from home are telecommuting by choice. Sixty percent marks a dramatic increase against survey numbers gathered before the pandemic that showed just 23 percent of eligible workers chose to work from home.
The shift of workers choosing a home office over a traditional office has allowed homebuyers to search well outside a standard commuting range for a new house.
Low housing inventory already plagued markets like Southern California, but the pandemic worsened that problem during an unexpected market rebound in 2021, right in the middle of the pandemic.
Data gathered by the United States Census Bureau and Zillow showed a steep decline in available houses for sale in 2020, and that decline created a hyper-competitive environment for homebuyers. The market simply couldn’t keep up with demand.
In an era already marked as a brutal environment for homebuyers, the strain of the pandemic has made it unlikely that the number of houses for sale will catch up to demand anytime soon.
The pandemic forced many industries to grind to a halt for months. The era of leisurely open houses and a plate of freshly baked cookies in the kitchen disappeared; real estate agents replaced their community open houses with video chats and strict timeslots for buyers interested in seeing a home in person.
According to data shared by The Los Angeles Times, homes today sell faster than at any point in the last three decades. Incredibly, more than 60 percent of home buyers nationwide submitted an offer on a house last year without seeing it in person first.
The race to the finish line to buy a house may continue at its breakneck pace despite the loosening of social distancing restrictions.
Despite the incredibly competitive market, every step in the home buying process hasn’t become an impossible mountain to climb. Information from The Motley Fool indicates that borrowing remains affordable with historically low interest rates in 2022.
Although traditional borrowers who want to buy a house with a mortgage remain at a disadvantage against cash buyers, getting approved for a mortgage isn’t as tricky as it was at the close of the Great Recession of the 2000s.
Qualified buyers can feel confident in their ability to secure a mortgage at an attractive rate despite the likelihood of interest rate hikes on the horizon.
The next year may see the Covid-19 pandemic transform into an endemic virus that’s here to stay. The changes wrought by the pandemic may also become part of the future of real estate in Southern California and across the country.