COVID-19’s spearheading a brutal rampage on the real estate market. From restaurants to office spaces, every sector has been adversely affected. 

Moreover, builders are finding it hard to get their hands on important building materials. Real estate listings are also showing increased volatility. Many strong and respectable real estate companies find themselves in the thick of this calamity, but it doesn’t mean it’s the end for the real estate market altogether.  

This article will explore the real estate market’s plight in today’s unfolding pandemic. This will also get you up to speed with Kansas City Real Estate, or anywhere in the world, recent developments. 

Listed Securities Are Experiencing Rapid Fluctuations

REITs (real estate investment trusts) are listed securities traded on exchanges on an MTM (mark-to -minute) basis. This gives investors an immediate valuation of their prices. 

Under COVID-19, these securities have experienced significant intra-daily and daily fluctuations. Their volatility has been markedly high and has decreased investor confidence. 

As a consequence, property markets have found themselves working a bit harder to stay on top of the pandemic. But, despite everything, they’re managing the best they can. 

Unlisted Properties Are Remaining Steady

Unlisted property securities are different from REITs. The former is valued at the end of each quarter or annual period. Trustees also assign a fixed percentage valuation to these securities at the end of each cycle.

Mostly, the valuation is divided into four parts across a year. This makes investors liable to a ¼ cut at the end of each quarter. Because of their spaced-out nature, their volatility hasn’t fluctuated as adversely, and investor confidence has remained steady. 

In the future, after the pandemic is over, things will hopefully follow the same pattern.

The Tourism Industry Has Paled

The tourism industry has been badly hit. The implementation of strict social distancing rules coupled with the collapse of oil prices is driving restaurants, bars, and sports venues to the brink of bankruptcy. 

A prime example of this is Harris County, Texas, where restaurants have been strictly forbidden to entertain any sit-ins. Only drive-thru, delivery, and pick-up services are allowed. 

As a result, this has shot down real estate prices in these sectors and is also bound to have long-term effects due to diminished consumer spending, among other factors. But, with the guidelines provided by concerned authorities, this sector can minimize its losses, and make full recovery in due time.

Homebuilders Are Facing a Severe Shortage of Materials

Homebuilders are bearing the brunt of the pandemic’s economic rampage. They’ve experienced a slump in demand from home shoppers due to social distancing rules. Furthermore, their vital supply chains are disrupted because they depend on markets like China to stock their inventories. 

According to an NAHB survey, coronavirus has badly affected the housing market. Almost all (100%) prospective buyers have failed to finalize their property deals. 54% have also reported difficulty in getting their hands on materials needed to build their homes.

China’s decision – a major supplier of building materials worldwide – to lift its economic lockdown has, however, uplifted spirits. 

Mortgage Loans Have Become Unaffordable

Builders are also experiencing a bad turn of fortune in terms of mortgages. The situation surrounding non-conforming mortgage loans is especially alarming. 

Buyers who are self-employed or steeped in debt are having a hard time getting access to these mortgages. In these conditions, builders have conceded that their developmental spending will nosedive in the coming months. 

But, they’re hopeful that concessions will be provided to them in light of the current pandemic. 

The Rental Industry Is Mired In Financial Difficulties

COVID-19 has also affected the rental apartment industry. Landlords are trying to find a reasonable solution to provide relief to the tenants who have lost their jobs, and are in no position to pay rent. Many tenants have also handed in requests for forbearance in May.

Rents are speculated to soar in the future. This will also be around the time lenders will demand their forbearance back, which will further complicate things.

Landlords have, however, realized that it’s in their best interest to keep their tenants homed, which has provided a glimmer of hope in these testing times. 

Office Sector Is Experiencing a Period of Dwindling Activity

At the current moment, the office sector is an abandoned lot. But, as the first signs of COVID-19 subside, it’s going to become crowded once again.

Right now, most companies are exploring the possibilities of working remotely. Preferably, one that allows employees to work from the convenience of their homes. 

One shining example is the roofing sector, which is educating workers to use teleconferencing and aerial measurement technologies to replace on-site inspections and sales calls.

However, even with the popularity of working remotely, the office real estate market is likely to bounce back. 

The exact timing depends on the impact and length of the current recession. If, fortunately, lockdowns are lifted shortly, job generation will climb, along with the demand for office space.

Agents Are Making Things Work 

Despite these deteriorating sectors, the spirits of real estate agents haven’t bogged down. They continue to sell homes while taking precautionary measures.

According to the New Straits Times, 26 percent of global real estate agents are working remotely to manage their operations. The same source also reports that 24 percent of agents are still going to work and protecting themselves by regularly washing their hands with hand sanitizer.

Some workers, however, have put their absolute safety first. They have put a stop to all their work and are waiting for the pandemic to take its last breath.

The Verdict

The real estate market’s prospects in the current pandemic are not looking bright at the moment, but it won’t last forever. Every associating sector is finding it hard to keep itself financially afloat. However, there’s hope that it will show signs of recovery when things open up back again and resume their normality.