The world as of today is experiencing swift instability in economic growth due to the outbreak of COVID-19 (coronavirus) which originated from China. The rapid spread of the virus across the world has raised questions among nations, analysts and economists alike; the question, what are the effects of this pandemic globally in areas such as health, businesses, industries, governments, investments among others.
The continuous spread of the virus has called for shutdowns of all to major economic activities, factories in countries including China the world’s largest manufacturer and exporter. Disturbing as it is, the shutdowns that started with China affected several countries’ day-to-day activities because of intercontinental trades that tie these countries together. The measures taken to contain the spread has affected many industries, the real estate industry inclusive. However, the impact of the virus varies by segments of the market and the period of shutdowns. There is no telling how much impact the real estate industry will face due to uncertainty in lifting off shutdowns, quarantines, layoffs, and curfews.
The section of the industry that has felt much of the shutdowns is hotels, lodges, conference centers, restaurants, casinos (particularly in tourist areas and travel checkpoints), then to retails, luxury and residential homes. While supplies for new developments to meet previous demand on housing are being interrupted as workers, businesses, supply companies stay home, demand for real estate in connection with tourism and travels (hotels, town halls, conference centers, etc.) are relatively low. Not only do developers feel the drawback on the supply of materials but also on-demand from homebuyers. These forces coupled with other factors from various industries will drive the global economy into a downturn.
What does this mean for Realtors and Buyers?
For the time being, realtors are becoming innovative about their businesses. Instead of moving about and showing homes on the market to buyers, they are launching digital home touring to keep the market active so to say. The pandemic will affect household income due to the shutdown of economic activities. Buyers’ decision to buy a home now will be influenced by a constant flow of income regardless. While this may be the case, there will be different groups of buyers, those with secured jobs and income may still want to buy while those whose income is affected by the spread of the virus may be unable to.
What do those looking to sell do?
It is important for sellers to understand the turbulence in the global economy and industries due to the pandemic, and how this could affect the price of their homes. Although some sellers will sell because of reasons known to them, others will not but wait, as profits may decline. This is not to say that conditions are the same and turnovers for sellers may decline in every region. No, there is a varying degree to the situation and it is only based on factors in each region that one can decide to sell or not to sell.
How will investors react to the situation?
There is no one way how things will turn out for investors from different regions and sectors of the market. For some sections of the market, it may be time for investors to buy if the price falls. However, one must understand that there is no certainty about how economic activities will turn out, as well as their investments as this is tremendously dependent on the length of time it takes to contain the virus and how quickly the economy stabilizes.
The mortgage institutions and their response to the contagion.
Following the impact of the virus on the financial market, the decline in interest rates has affected the mortgage institution as well. The outbreak of the virus will make it difficult for the mortgage institution to take action on evicting occupiers who defaulted on their mortgage. Meanwhile, the volatility in the market will cause new applications for a mortgage to slow down or be canceled to avoid risk.
By far, the 2020 economy will be hard due to the coronavirus outbreak. It is however clear that the economy is undergoing recession and to recover from it will depend on how the spread is contained, how quickly governments, financial institutions, companies, and industries work at stabilizing the economy.