The real estate market began as expected in 2020, but the recent coronavirus pandemic has had an impact on the first quarter. The National Association of Realtors reports a 11% drop in potential buyers and expects a 10% reduction in sales. Unfortunately, this downward trend is likely to continue at least in the short term.
Three factors that are currently causing hurdles for the real estate market include:
- Loss of income. A number of people had their positions terminated, are currently furloughed or have experienced a significant reduction in hours.
- Closed government buildings. Safer at home and shelter in place orders have left many town and city halls closed. This will make it difficult to record a deed and any other documents that accompany the real estate transaction.
- Changed work realities. The pandemic has led to a huge change in our work culture. More and more companies were forced to shift to a work-from-home model and leave their office spaces unoccupied. As things return to normal, some businesses may embrace this new work culture and downsize office space.
These uncertain times have also changed how we are negotiating real estate deals. Real estate professionals are recommending prospective buyers and sellers consider adding provisions to real estate contracts addressing situations that may arise due to the coronavirus. This could include how to navigate a situation where one party is under quarantine.
So, how does the real estate market look for 2020? Although unable to find certainty, some likely realities include changes to negotiations and discussion of inclusion of additional provisions within real estate contracts to reflect some of the uncertainties we are currently navigating. Those who are in a position to invest or purchase additional properties could find the market in their favor.