What will be the new trends as a result of COVID-19?
Like everyone right now, I am spending a lot of time at home thinking about the short, mid and long-term impacts of our "new normal". A question I keep thinking about is what will be the new trends that will emerge as a result of COVID-19. For example, will we see a movement from our large urban centers like NYC to millennial cities like Nashville, Austin or Boise? How will these new trends impact the real estate market in the U.S.?
The trend to move from large urban centers to cities like Austin had started way before CoVID. If I look at teh migration patterns over the last few years, Austin has been getting an influx of migrants from large cities from the coast and even within Texas due to the high cost of living or Austin having a more relaxed and family oriented life style ... or the tax savings :)
I see more businesses having employees work remote. Densely populated places to have people migrate out. Certain industries( like hospitality) have lower customers and clients for the next few years. Better hygiene ;)
Wait, young people are the last to be affected by cv, so i doubt they have an incentive to move, except due to the new telecommute trend. If you can work from anywhere why not go to a much less expensive zone, but still have 1/2 hour access to city services?
The next 6-12 months will be fascinating. I think it's easy to see that more companies will move towards having at least a partial remote workforce. Technology has been given the chance to prove itself and passed with flying colors. More brick and mortal buildings go vacant as gyms, offices and restaurants close for good. Thus opening up more real estate for residential development and putting pressure on home/rental prices? I do however see people upgrading their primary residence to now include a home gym, dedicated office space and home theater room..
Not sure about most things but I think commercial office space is going to be particularly shaky when this is over, because there's going to be a lot of businesses that figure out they don't really need any kind of fancy digs in order to service clients. I think that will be some lasting fallout from all of this. Beyond that, a relatively free market tends to squeeze the inefficiencies out of business over time anyway so I suspect most stuff that we aren't doing now we will just go back to doing. Those who find they can tele/video commute just fine may end up moving where they want to be instead of where they had to be.
Do we think this will result in more people electing to rent instead of own on the residential side? I can't guess at it. On one side, a scare like this might make people thing twice about a mortgage. On the other side, rates are so low, and this might reinforce the need for some more fiscal responsibility, so a year from now, people may be in a much better position to own. Housing prices around here seem relatively unaffected. There are less on the market, so it seems to be balancing out fairly evenly. One trend I think we'll see, much tighter tenant qualification process, but that's a guess.
I think restaurants may be rethinking as well. Seems the takout/delivery model would be more viable moving forward, and would save a ton of resources with no retail, high visibility location, much smaller footprint, delivery personnel instead of wait staff, no dishes to clean, etc.
I agree that organizations will seek a balance between at-home workers and in-office (as needed) options. This is a good thing as it will force laggard organizations to start considering remote options for more people, reducing their commuting times. From a Real Estate perspective, I think Agents will need to ramp up their use of digital tools (virtual tours, social media, etc.) I'll go one step further, savvy Realtors will need to better understand their client's expectations, their digital acceptance, willingness to do virtual consultations, showings, and even buying physical sight unseen in some cases. This is why I highly recommend shopping for Realtors that can embrace the "new way of working" and offer alternatives that can set them apart from the rest while meeting the increasing demand from millennials (largest buying segment in the US).
All things considered, Americans are amazingly adaptable, resilient and innovative people, we will bounce back, and the Real Estate marketplace is no exception!
Originally posted by @Joseph Walsh:Do we think this will result in more people electing to rent instead of own on the residential side? I can't guess at it. On one side, a scare like this might make people thing twice about a mortgage. On the other side, rates are so low, and this might reinforce the need for some more fiscal responsibility, so a year from now, people may be in a much better position to own. Housing prices around here seem relatively unaffected. There are less on the market, so it seems to be balancing out fairly evenly. One trend I think we'll see, much tighter tenant qualification process, but that's a guess.
Crisis tends to make people get conservative, in everything from political viewpoint to spending money. But that's not always true; a lot of the things we got during the Roosevelt years were pretty liberal, relatively speaking, for the times - unemployment insurance, social security, etc. I would think this issue will go both ways - it will liberalize the thinking of some people, on things like national health care and safety net programs - while other people will become much more tight-fisted with their money. Counterintuitively, holding on to money is the worst approach in a financial crisis for the good of all but is usually the best for the good of the individual, and it's difficult to get people to think broadly when they are worried about paying their rent.
Originally posted by @Will G.:I think restaurants may be rethinking as well. Seems the takout/delivery model would be more viable moving forward, and would save a ton of resources with no retail, high visibility location, much smaller footprint, delivery personnel instead of wait staff, no dishes to clean, etc.
Even before the COVID-19 scare a lot of restaurants were creating "kitchen only" spaces for delivery only. I myself haven't latched onto this model yet, another set of hands touching my food isn't that attractive to me. (Yet)
UBI makes a lot more sense now than ever before. Given the many trillions of dollars of government money used to bailout everyone, where there apparently is little oversight, UBI would seem to be more efficient and direct. I think we will start to see massive fraud reported in the coming months, where select groups will collect unbelievable amounts while leaders point fingers... and the taxpayer will foot the bill.
Until we (as a society) have effective vaccines, treatments, and some kind of immunity/immunization, those people in high risk groups will remain mostly isolated. That wildcard is the hands of the pharmaceutical companies.
Commercial property owners seem to be In a vulnerable position. Chinese buffet, anyone?
In addition to the calls for universal healthcare, there is a national campaign for a Homes Guarantee. I think there will be pressure on the federal government to improve the housing social safety net including improving and expanding public housing. Public housing is stigmatized in the United States, but in other countries (like Singapore) public housing is mixed-income, safe and high quality. I have my doubts about the Federal government's ability to execute this effectively, but if we could mimic Singapore or Austria it could be beneficial for society. Important to note also, that in these countries, people can still buy and sell real estate and people can choose to rent from private landlords. Public and privately-owned housing exist in tandem.
In terms of the rental market, I think there will be an expansion of C-class apartments and rental housing. As residential lending standards tighten (higher down-payments, higher credit score requirements) I believe we'll see an increase in renters and decrease in home ownership.
I predict huge changes in San Francisco and the Bay Area in general. I think that once we go back to (a new form of) "normal", Silicon Valley tech companies (Google, Yahoo, Youtube, Facebook etc) will realize employees working remotely can be as productive as having them physically present on site. Companies might also note the millions of dollars they would save by closing down their offices (no mainteance, no shuttles, security, cleaning, no free restaurants for employees, no utilities bills, etc).
Once techies start working remotely for good, they will realize they don't need to be in SF and pay 2k to rent a bedroom in a shared house and would move to more affordable/cheap areas (US and/or abroad).
If this happens the crazy rents would have to go down dramatically (probably not for those who stay in the city). Ultimately, this would affect the price of properties.
@Jennifer Bryant, the public housing here are called HDBs (Housing Development Board). They range from extremely low end to above average. I’ve toured a few and some are quite nice! Buying new, you’ll get a 99 year lease. No true ownership.
@Terry Louwerse, I agree but only to some extent. We are a tribal race and crave a sense of community. Over here in Singapore, not everyone has the ability to afford a spare bedroom to use as an office. I assume that’s the case in San Fran as well. But, I do agree we’ll see a shift to co-located offices. Perhaps a more economical (smaller) office in the premium prices district and a few “back office” locations scattered outside the metropolitan areas. We’ll see how the trend plays out but I’m hoping the space between people increases.
Working from home full time will just not be doable in cities like Hong Kong, Singapore, London, New York, etc. But, humans will expect employers to be extremely flexible with their requirements on working location.
I think.. as it did in california, testing will show covid 19 is far more widespread and far less deadly than reported. By a factor of 50 to 90 times. The lead docs had to know this, I mean only test people who are almost dead, then report it's super deadly. This may be a deliberate attempt to wipe out the small businesses. mark Twain once said, there are lies, there are damn lies, and then there are statistics.
Originally posted by @Gordon Starr:I think.. as it did in california, testing will show covid 19 is far more widespread and far less deadly than reported. By a factor of 50 to 90 times. The lead docs had to know this, I mean only test people who are almost dead, then report it's super deadly. This may be a deliberate attempt to wipe out the small businesses. mark Twain once said, there are lies, there are damn lies, and then there are statistics.
Can you provide a link to the study showing the 50 to 90 factor? I don't believe your theory that trump wants to kill small businesses ,but it was clear (spoken from his own words) that he did want limited testing to "keep the numbers low."
The la times and CNN both broke the story today. Two seperate studies from Stanford and USC both showed the same basic thing. 3 to 6% of adults in la county had been infected.
@Terry Louwerse
Funny as I was talking to a younger friend who laid out a similar scenario as you and then quickly asked mr how much do I think RE prices will fall in the city of SF by? I asked why, he said he’d love to buy a place in the city as he had been priced out for a really long time. I jokingly told him he was speaking from both sides of his mouth. Fact is as much as people want prices to crater, they also want a piece of the SF RE and life action!! It’s a dream of many a 20 some or 30 some to live and work in super cities like NYC, SF etc, I don’t think that is going away.
My read is people are overestimating the impact of change. I don’t recall much changed a few years in Louisiana post Hurricane Katrina in terms of how people lived or Hurricane Sandy in NJ. I did see things significantly quieten in Paris post the terrorist attacks but in a few months it was back to normal. The Spanish flu technically should have led everyone living in isolated jungles or hills. Nope nothing of that sort happened.
My prediction is once an “all clear” alarm is sounded, life is back to normal in 90 - 180 days.
Sam Josh. I agree with you. Once back to normal, we do not expect many people will move out of their current place,Moving is not so simple and easy issue.
As a Realtor in Boise, I am seeing more people asking about high speed internet options in neighborhoods, wanting separate living & family rooms (or bonus rooms), more interest in home office set ups and wanting larger lots / acreage. I also think true virtual tours like the Matterport tours will become the new normal, not just for showing homes for sale, but for rentals since if done properly, you can use the tour to pre-market income properties before they go vacant.
I don't know about you, but one thing I plan to do as look at the reaction(or over reaction, etc.) to this by local communities and how they treated landlords. Some places flat out panicked, and screwed us in the process, with little concern of the consequences and a bit of "they can afford it" attitude. Fortunately, the Senate and Administration pushed through "small business" help, and landlords qualified in many cases. I plan to take stock of those communities, and avoid them permanently going forward, at least for rentals.
Originally posted by @Jim Paulson:As a Realtor in Boise, I am seeing more people asking about high speed internet options in neighborhoods, wanting separate living & family rooms (or bonus rooms), more interest in home office set ups and wanting larger lots / acreage. I also think true virtual tours like the Matterport tours will become the new normal, not just for showing homes for sale, but for rentals since if done properly, you can use the tour to pre-market income properties before they go vacant.
Virtual tours, like Matterport, could also serve you (as a landlord) as documentation on the state of the appartment when the tenant moved inn. When the tenant moves out you could easily check if some damage were caused by him or was there already.
It has been interesting reading the replies to this discussion a month later. Most of the predictions mentioned on here are already true. I do think that as we become more and more familiar with the "new normal" perhaps we'll also start going back to our old normal once we notice that we have navigated through this.