While the introduction of the vaccine has been extremely quick and has thrown most expectations out of the water, we are not completely out of the woods yet. Even if states reopen and remove masked mandates, worrying new varieties of concern for Federal Reserve Chairman Jerome Powell will spread fast enough some alarm bells ring. So what can we expect when wealth deteriorates and we enter a third wave, even if it is somewhat mitigated by vaccines, which will have an impact on the real estate market?
The proliferation of variants would lead to a recovering economy and a real estate market still being held back by low supply. Many anxious homeowners have chosen not to list their home for fear of unnecessary contact with people attending demonstrations, which further limits what is available on the market. The expert consensus, however, is that given the development of the real estate market that has already taken place and the effectiveness of vaccines themselves, a significant increase in certain cases should not affect what is expected to be a record year on the purchase market. What will make a difference, however, is the way mortgage and real estate professionals target individual buyers and sellers who are still concerned about the spread of variants.
“It is possible that another wave of COVID-19 cases will discourage some potential US sellers from putting their homes up for sale, creating an even more competitive market for buyers,” said Laura Adams (pictured), Senior Real Estate Analyst at Aceable, an online real estate educator. “However, the vaccines that have been effective in preventing severe COVID-19 cases are being administered millions of times a day. This should give most sellers the confidence to move a property transaction forward. Unless we see an abnormally high spike in COVID-19 cases or a variant that jeopardizes the effectiveness of the vaccines, we likely won’t see any major changes in the real estate market this year. “
Adams also noted that while COVID poses a risk to America’s economic recovery, it does not pose the same risk to a real estate market that has remained the economic ray of hope throughout the period. Driven by the special needs of the pandemic and the acceleration of prepandemic trends, The demand for single family homes will remain strong.
Regarding the nervous salespeople, Adams noted that technology is so advanced that purchase transactions can take place without droves of people wandering through an owner’s home. Demand has also pushed people to bid in places they have seen less of or buy in subway areas they may not know as well for the promise of affordability and space.
“There are now many more tools that you can use to safely list and view homes. Virtual tours, turnkey 3D solutions, and other methods of reducing face-to-face contact are far more the norm than they were before COVID, ”said Kenon Chen, executive vice president of corporate strategy at Clear Capital. “We are able to conduct desktop assessments nationwide and enable home inspections of properties via smartphones. All of these things help to reduce possible fears. “
However, overcoming fears requires both technology and education. Adams believes mortgage and real estate professionals need to step up their educational efforts as they show potentially concerned homeowners what options are available to them. If it’s been a decade since this person sold their house, they’ll be surprised to learn how digitized the process has become. Educating sellers and buyers about the options around virtual demos can help bring more inventory to the market and help make a mortgage or real estate professional stand out and win deals.
We have already seen COVID drive people out of cities, and both Adams and Chen expect another wave to push the demand for sparse density even further. In these scenarios, Adams believes this is critical as buyers are already feeling the pressures of a competitive marketplace Mortgage professionals to act as voices of caution and reason.
“I think helping people understand what they can afford is important because many buyers will get into bidding wars and feel the pressure to potentially over-spend,” said Adams. “Even if they have pre-approval, they may not really be able to afford the high end of that pre-approval. So make sure buyers don’t get into a situation where they are spending more than their budget allows and that they will suddenly feel the pinch. “