Real Estate Rundown September 2020
September 03, 2020
Photo by Adobe Stock
What to Expect in 2021
It’s no surprise: The biggest concern in real estate is still largely tied to economic changes brought on by the pandemic. From market volatility to mounting debt, nearly every issue predicted in real estate next year stems from the ongoing uncertainty of COVID-19.
While we will likely see a rippling effect in multiple markets over the next year, there are still many concerns on the table. David White of the Counselors of Real Estate recently announced his top 10 issues facing real estate, and, apart from the omnipresent pandemic, U.S. real estate is still threatened by economic uncertainty and capital market risk.
Among his top 10 concerns for the year ahead, White cites affordable housing, immigration, urban planning, and infrastructure. These are particularly noteworthy as we head into an election season. Realtors, take note-- his predictions apply to nearly every community in the U.S.
Buyers, Sellers, and Agents Face Unique Challenges
Real estate trends in Asheville reflect a national trend: While mortgage rates are at an all-time low, borrowers are faced with shifting regulations while trying to obtain a loan. Meanwhile, there are far fewer houses on the market. So, what does this mean? The market remains competitive, but buyers need to come prepared. “With so many additional hurdles to clear, agents and lenders alike strongly advise potential buyers to get their ducks in a row before getting attached to a particular property,” Thomas Calder of the Mountain Xpress writes.
At the same time, agents are following highly restrictive pandemic guidelines that bring new challenges to the buyer experience. “We joke that we took a side job as therapists,” Steph Cochran of Mosaic Community Lifestyle Realty said in an interview. “The pandemic has caused us to realize we need to keep a cool head and be an anchor to help guide clients through the process.”
What to Expect for Next Month’s Mortgage Rates
Mortgage rates have consistently hit new lows month after month, but will we finally see a breaking point in September? Some experts think so.
The increased demand for home sales and refinances could slowly push mortgage rates back up following basic supply and demand. Other factors influencing rates include concerns around inflation and the need to make up for losses from recent forbearances.
There is some good news, though.
On their own, these circumstances are not likely to cause a sudden spike in rates. The combination of the three may have a more powerful impact, but it will likely be a gentle shift upward in rates rather than an unmanageable hike.
Commercial Property Owners Take a Creative Approach
"Nobody ever lets a crisis get in the way of creating opportunity."
The New York Times recently covered the impact of COVID-19 on commercial properties, and, unsurprisingly, many developers are finding innovative solutions to repurpose their space. As this sector of real estate is highly impacted by state-mandated quarantines and company-wide work-from-home orders, property owners are renovating and marketing their properties to different industries.
Commercial buildings previously optimized for cubicles, conference rooms, and corner offices are being renovated and rezoned to support anything from retail stores to continuing care retirement communities (CCRCs). While the costs are manageable, developers do face the challenge of shoring up loans in a risk-averse market.
This approach has worked with “obsolete” or historic buildings, but it’s uncertain if the same approach can save modern commercial properties.
Realtor.com Launches New Feature to Highlight Flood Risk
Anyone in the market for a new home will now have even more to think about if they’re shopping on Realtor.com—the site has now added a “flood risk” disclosure for homes outside of official floodplains. The disclosure also provides estimated risk based on impacts from climate change, allowing consumers to make an informed decision based on their goals.
While buyers may benefit from knowing what to expect, some experts are concerned about how this will affect home values and, subsequently, homeowners’ finances. Other popular real estate websites like Zillow and Redfin have yet to adopt the same feature. "It's something that I think, sooner or later, would be a great feature to include,” a Zillow representative told NPR.
Armed with the right data, homeowners may have a greater incentive to opt into flood insurance, even if they aren’t in a high-risk area. Moreso, they can start preparing their home early on with simple renovations like sump pumps or rain gardens. "It's really important for consumers to know this," Leslie Jordan, senior vice president of product at Realtor.com said in an interview with NPR. "The data is going to be figured out at some point. It's better that it be disclosed at the beginning."