It is evident by now that the coronavirus pandemic has forever changed the way we live. COVID-19 has even changed the very foundation of how we work and do business. And just like other industries, the commercial real estate and residential real estate industry has been forced to adjust to a ‘new normal’.
So, what are some of the ways COVID-19 has changed real estate?
1. Modified Home Designs
The COVID-19 pandemic has forced people to reconsider how they build and live. Due to social distancing rules and stay-at-home directives, people are spending a lot of time indoors. Most homebuyers and tenants are now looking for large, open-plan houses that accommodate a wide range of activities including physical activity, work, and entertainment. In addition, there is a growing need for private outdoor spaces like balconies, porches, micro backyards, and roof gardens.
There is now an emergence of contactless rental properties where voice-activated technology is used for controlling things like appliances, faucets, and lights. Building materials like bronze, brass, and copper that are easy to clean and have natural antimicrobial properties are also becoming popular. Such materials are mainly used in kitchen cabinet handles or doorknobs because they can kill bacteria and germs on their own without constant sanitization.
Air quality has also become a major concern during the COVID-19 pandemic. As a result, many people want to live in homes that have an air purification system installed.
2. The Rise of the Home Office
Research conducted by Gallup earlier this year revealed that 62% of employed Americans were working from home. Interestingly, 59% of these remote workers said that they would want to continue working from home as much as possible. Due to this trend, real estate developers have had to modify their product’s in order to meet buyers’ and tenants’ demands. People want a workspace that supports creativity and boosts productivity. As a real estate investor, you could choose to incorporate workspaces into the bedroom, kitchen, or living room. Alternatively, have a dedicated well-lit, and aerated room where someone can work with little or no distraction.
Connectivity is another important aspect of remote working. People are looking for a fast and reliable home internet service which allows them to stay connected to their clients or colleagues. If you are thinking of buying a rental property, consider offering free or subsidized internet connectivity as a strategy for attracting tenants.
3. Renewed Interest in the Suburban Real Estate Market
According to Institutional Real Estate, sales of homes in Manhattan have dropped by over 50% since COVID-19 struck. The Zillow Urban-Suburban Market Report revealed that suburban listings got 62.2% of the page views in June, while urban listings got only 16.4%. With cities being the hot-spots of coronavirus infection, many people feel safer relocating to suburban areas. Avoiding crowded malls, elevators or subways minimizes their chances of catching COVID-19. The increasing popularity of working from home has also fuelled the move away from cities. Demand for spacious country homes with yards has resulted in low real estate inventories and high prices in many suburban areas. These trends have even caused more suburbs to appear on lists for the best places to invest in real estate for 2021 as demand and prices grow in these areas.
Related: Suburban Real Estate Market Boom Due to COVID-19
4. Restrictions on Eviction
The Centers for Disease Control and Prevention (CDC) issued an eviction moratorium that stops landlords from evicting renters who default on rent payment. This moratorium is effective through December 31st and is meant to prevent homelessness which could result in more COVID-19 cases. Though some landlord associations have tried to challenge these orders, their efforts have not been successful. With tenants falling behind on rent, landlords are still counting their losses.
Related: Eviction Bans 2020: What Landlords Need to Know
5. Reliance on Technology for Property Management
Since the COVID-19 pandemic struck, it has not been business as usual in property management. Due to social distancing and stay-at-home orders, property managers and landlords are increasingly relying on technology to get things done. When it comes to marketing rental properties, traditional methods such as flyers are being ditched for online marketing strategies. Instead of physical open houses, property managers and landlords are now using virtual tour software to give potential buyers and sellers a 360-degree view of the property. Tenant screening is being done via video conferencing tools such as Zoom, Skype, Apple Face Time, and Microsoft Teams. The electronic signing of leases is also becoming popular as a way of minimizing human contact.
Related: How to Deal with COVID-19 as a Property Manager
6. Airbnb Health and Safety Requirements
Due to travel restrictions, the short-term rental industry experienced a significant decrease in occupancy rates earlier this year. With the gradual reopening of economies in recent months, things are slowly picking up and Airbnb occupancy rates have recovered, on average. However, Airbnb hosts and guests have to abide by the COVID-19 health and safety guidelines issued by the US Centers for Disease Control and the World Health Organization. First, all visitors and hosts must agree to maintain a distance of 6 feet from each other at all times and wear a face covering when engaging in person. In addition, they are required to wash or sanitize hands regularly. Hosts must adhere to the Airbnb enhanced cleaning protocol between guest stays. In shared spaces, the number of guests should be limited to allow for social distancing. If you have symptoms of or have been recently exposed to coronavirus, you are not allowed to travel or host.
7. Increased Reliance on Real Estate Investment Software
Due to COVID-19 safety concerns, many people are not looking for property using traditional methods such as driving for dollars, attending auctions, or working with real estate agents. Instead, they are increasingly dependent on technology and real estate investment software to find homes that fit their criteria.
For example, instead of physically visiting a neighborhood to check it out, investors are using tools like Mashvisor’s real estate heatmap which helps you identify the best neighborhoods for real estate investment. Even those interested in off market properties are turning to software like the Mashvisor Property Marketplace. To view properties, buyers and agents are using virtual tour software as opposed to visiting homes for sale in person.
With most of the country experiencing a second wave of COVID-19, the US housing market is not yet out of the woods. Some of the changes above may be permanent and some may last into 2021 until a vaccine is introduced. Either way, if you are planning to buy a traditional or Airbnb investment in 2021, be sure to stay updated on the latest developments and trends in real estate. For more, check out Mashvisor’s Coronavirus Real Estate Trends.