Real Estate Trends During COVID
By John M. Lee
Now that we have been in the COVID world for seven months, certain trends have emerged in the real estate market – some expected and some unexpected. As a student of real estate, I thought I had seen everything. I will have to digest what has transpired and file some of what occurred in my memory bank. We will be living with COVID for at least a while longer, so these patterns might change again, but here are some of my observations thus far.
With the coronavirus mostly being transmitted by air, people are leery about living in close quarters with others. So, there has been a flight out of high-density living quarters such as highrise condos and large apartment buildings. The listing inventory of condos has gone way up and many are sitting on the market with price reductions. The same is happening to the larger apartment buildings with tenants moving out and relocating to smaller buildings with fewer residents.
On the other end of the spectrum, single-family homes are selling well as buyers are shifting their focus away from the downtown condos. In our west side of town, we are the beneficiaries as our housing stock consists of mainly single-family homes and small multi-unit buildings. This unexpected demand from the effects of the coronavirus actually helped to boost our prices up the last few months.
Buyers are looking for more space as most are working remotely from home instead of going to an office. So, an extra room for an office or an escape from the kids is especially important. Outdoor space for entertaining became more valuable as congregating indoors creates more risk of exposure to the virus.
Because of this, homes outside of San Francisco are also selling well and prices have appreciated because of it. Second-home markets, such as Sonoma and Napa, have been even stronger than our San Francisco market as people look for more living space and large backyards. The suburbs have also performed well because buyers can work remotely and not have to go into the office. That means a commute is no longer a factor. Our high-end single-family-home market also has been selling well, as those are the ones with more square footage and outdoor space.
From the rental standpoint, tenants are facing the same trend and are looking for lower-density living. They are moving away from the large apartments or condo complexes. Roommates used to like sharing large apartment units or single-family homes, but now feel that it is too dangerous to live together, and thus rents in these types of units have come down. There also are quite a number of vacancies. One report has the rents down 30% from last year. Owners are offering incentives for tenants to move in.
Many tenants have decided to move out of San Francisco because they can work remotely and no longer have to be close to their workplace. Some have even decided to put all their belongings into storage and rent Airbnbs for months at a time in different places all over the world. They can work remotely and have a travel experience at the same time! And with rents still so high in San Francisco, they might even be saving money while enjoying a new environment.
What this has also caused is a shortage in storage facilities. Some people I know had to store their belongings further down on the peninsula rather than close to the City.
This pandemic has taught us many things. Never in my wildest dreams did I imagine something like this happening in my lifetime. However, the most important life lessons I have learned through this are to love and care more for the people around me and be more careful about my surroundings. I hope you all stay safe out there, and we will get through this!
John M. Lee is a broker at Compass specializing in the Richmond and Sunset districts. For real estate questions, call him at (415) 465-0505 or email firstname.lastname@example.org.
Categories: Real Estate