Everyone agrees that the COVID-19 outbreak is set to have a long lasting impact on the U.S. economy, and the housing market is no exception.
In a new report this week, Apartment List has outlined some of the long-term changes it thinks will affect real estate.
The report notes that people’s mobility will be much lower than it was previously, before spiking.
“Geographic mobility generally declines during downturns, when a lack of job opportunities catalyze fewer long-distance moves across market or housing upgrades,” the report said.
A moratorium on evictions and foreclosures will also help to reduce mobility, but analysts say they predict a spike in people moving home once the outbreak ends.
“Many upgrade and downgrade moves will be postponed rather than canceled, creating a reshuffling of households throughout the recovery,” the researchers note.
There will also likely be a future wave of movement as people relocate following the outbreak in search of jobs, or to be closer to their family. Young people are also likely to want to flee the next to form their own households.
Experts say affordable rentals and homes for sale are likely to be impacted. Both were in short supply even before the pandemic, and the situation will get worse, they say.
“Fewer people moving means fewer homes available,” the report noted. “With both pandemic and policy keeping people in place, affordable units will become even more rare through the 2020 peak season.”
Luxury apartment inventory, on the other hand, may be abundant.
Those in the higher-earner wage bracket will likely take advantage of lower borrowing costs and refinance in order to reduce their mortgage payments. But lower-income households will struggle with the sluggish economic and rising competition for the remaining low-cost homes available.
“As shelter-in-place orders cover a growing share of the nation, those who are able to work remotely are at a distinct economic advantage,” the report said. “Unfortunately, a correlation between income and the ability to work from home reveals that the lowest earners will be hit hardest by these measures. Fifty-two percent of full-time workers who earn more than $100,000 annually say they can work from home. But only 15% of workers who earn less than $25,000 are able to work from home.”
Experts say they’re also expecting an increase in the number of people who buy a new home sight-unseen.
“Many apartment communities are already enabling virtual tours in response to the pandemic, and many renters and owners alike may soon be evaluating their next home through a tablet screen,” the report found. “Mainstream adoption of sight-unseen moves will bring both opportunities and challenges for the housing market.”