The COVID-19 pandemic has impacted virtually every facet of life. Retail stores and restaurants are operating at limited capacity or are closed. Social events and large gatherings have been all but disbanded entirely. A considerable number of people are working from home on a full-time basis now.
One of COVID-19’s most significant impacts has been on the economy and the residential real estate market. There have been several changes that are unprecedented in modern times.
The following are the three main ways that the pandemic has affected the residential real estate market.
Historically Low Mortgage Interest Rates
In response to economic turmoil, the Federal Reserve has lowered interest rates to historic near-zero lows. This has been one of several financial measures meant to prop up an economy that lock-downs and surprising unemployment numbers have hobbled.
In response to this measure, the residential real estate market saw a tremendous increase in the number of mortgages refinances as homeowners have tried to take advantage of low rates.
Further, there has been a rush of new home-buying in some market areas as people have also sought to buy at low rates.
Population Movement Away From Major Cities
While there has been a rush of new home-buying in most markets in the United States, traditionally-strong markets have been gutted. Markets like New York City and San Francisco have seen high numbers of people moving away. In New York City, there have been record-high vacancy rates.
This movement might be the partial result of an increase in work-from-home opportunities. People can move to lower cost of living areas when before many were tied to cities.
Millions of Pending Foreclosures and Evictions
In response to the Pandemic, the Housing and Urban Development Department (HUD) enacted both mortgage forbearance programs, and eviction and foreclosure bans for FHA mortgaged properties. In addition to this, many states also passed their versions of foreclosure and eviction bans.
Even though these measures have been extended multiple times, millions are pending foreclosure or eviction from their homes. It is unclear how this scenario will play out when the bans and mortgage forbearance periods finally terminate.
These are the three main ways that the COVID-19 pandemic has affected the residential real estate market. The economic impacts have been significant and incredibly unique. The changes are still playing out, and the market is continuing to respond.