It’s quite disconcerting how an organism, so diminutive in size, could cause so much havoc – not just to a certain group but to the whole world. Not only has this novel coronavirus been able to threaten the existence of the human species, but it has also brought the global economy to its knees.
Thankfully, while most sectors are feeling the pinch brought about by shelter-at-home orders in almost US state to stop the spread of the coronavirus, one sector is seemingly keeping its head above water – the real estate industry. Buoyed by the fact that shelter is a basic human need, the housing sector remains active, albeit, in a more cautious mode.
The current situation
The state of California is slowly reopening its businesses but the order to remain at home will continue with no specific date on when it will be lifted. Gov. Gavin Newsom has plotted out a four-step plan for the said reopening, taking the pains to ensure that contact tracing and mass testing are done in unison with the gradual reactivation of the local economy and to prevent future waves of COVID-19 infections.
Reopening the economy and the return to employment
In terms of market activity, movements in California and Texas real estate markets share similar characteristics. Both were already in the heat of registering strong sales figures and high property values. Experts looking into Bay Area real estate especially noted that they were seeing a buyers’ market for the first quarter. The onset of spring should’ve brought with it the promise of even more aggressive market activity until the COVID-19 pandemic struck.
Texas real estate experts note that markets in the country could rebound later in the year, but one major factor will affect how fast and how remarkable this rebound will be – the return to employment of people laid off due to the pandemic. Gov. Newsom’s reopening scheme may just be the salve to remedy the wounds inflicted on California’s economy and its real estate in particular.
Sound fundamentals, lower mortgage rates
Other real estate observers tend to look at the US economy in general and use this as their indicator of the housing sector’s overall health. When the pandemic first hit, the Feds immediately dropped interest rates to their record-breaking lowest to help minimize the blow to the economy. Mortgage rates also dropped shortly after that. The near-0% mortgage rates have actually helped in keeping the housing sector alive as the more astute buyers are taking advantage of these rates to finance their home-buying plans.
One expert from Realtor.com noted that after all, the situation everyone is in right now is biological in nature, not economic. Thus, pandemic or not, America’s economy has sound fundamentals and with that, it could easily bounce back to pre-pandemic levels. And with that, so will the real estate market.
The bottom line
There is still much speculation on how the real estate market would look like post-pandemic, given the uncertainty on when this global emergency will end or, at least, when it could be more effectively managed. On the local front, sentiments remain mixed as the order of the day is to stay updated on the gradual reopening of the economy. But rest assured, if California’s real estate sector was strong before, it can return twice as strong in the new normal created by COVID-19.