Property Values, Supply and Demand During and after Coronavirus Pandemic.
How will the coronavirus pandemic effect property values? Once the pandemic ends there will be an even bigger rush to real estate than before. Now is a good time for investors to look into investment opportunities and group real estate investing.
There are 2 schools of thought about the real estate market post COVID-19. Some say the prices will plummet while others think that prices will stay steady and interest rates will decrease even more. The one that remains steady is that either way, the rental market will become/remain strong. Investors looking into rental properties now stand to benefit in the long run. Since people will always need a place to live, however, during an economic downturn (much like this one) there will less home buying and more renting.
If you owned an apartment with 10 units, even if 2 of the units were unable to pay rent on time or had to vacate, you would still have income coming in from 8 of the units. Whether your property value drops temporarily due to the pandemic and the economic downturn is irrelevant since there is no plan to sell due to cash flow created from rental income. Most successful real estate investors buy a home or multifamily property in order to rent for cash flow or in order to sell in the future for a profit. Either plan is for a long-term ROI and not a quick turnaround. Since real estate investing and profit projections span over several years and decades and are not short term like the stock market, a dip in the short run has virtually no impact on the overall investment strategy or true property values. A real estate agent with experience in investment and rental properties can further explain this concept (www.aminvali.com).
How does the pandemic effect the supply and demand of real estate? The supply won’t change much, since the crisis may cause some to sell and others wont due to volatility in the economy and the world.
The demand, however, will be affected, it will drop during to the volatility we are all experiencing. This means that sellers looking to sell have fewer options, this allows investors to buy with favorable pricing. Once the pandemic subsides and the economy settles the demand will spike and anyone with property in hand will be at an advantage (www.aminvali.com).
Civil Engineer, MBA, Real Estate Agent, Multi-Unit Construction Project Manager in California,
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Realtor in Zutila Inc.