The last thing anyone wants these days is for someone next to you in line at the market, the bank or in our slowly-opening restaurants to sneeze near you. But if the real estate market starts to get seriously infected from the effects of the coronavirus, it may start to sneeze all over related industries.
The American housing market is such a major influence on the country’s economy that even a slight downturn could have a very big effect on goods and services generated from buying, selling and building new homes. Right now, there are large portions of the country where the real estate market is at a total standstill because of lockdowns. Properties cannot be shown to prospective buyers, sellers are taking their homes off the market and construction of new homes and apartments has mostly stopped.
Obviously, there are hundreds of industries related to the real estate market that are losing money and jobs. The construction industry is being particularly impacted per the Commerce Department which reported a 22% decrease in new home construction in March from February. The Northeast region is experiencing the most pronounced decrease in new home construction with a 42.5% decline during this period.
New construction generates a plethora of jobs – carpenters, plumbers and electricians in addition to support and office staff. The materials alone needed to build range from lumber to sheetrock to paint to concrete and roofing not to mention heating and air conditioning systems.
Sales of existing properties are also down across the country as they are right here in Manatee County. If and when this will turn around as we in Florida start to open our economy, we just don’t know. But what we do know is that a slow real estate resale market touches so many other areas of the economy.
When someone purchases a home, they spend money preparing that home for the specifics they need and require for their family. Even the lack of simple renovations like new flooring, appliances, landscaping and paint will have an effect on the economy. This is in addition to major renovations to existing homes that have been sold or aren’t even on the market yet. The fallout from homeowners holding up on renovations can’t be calculated but inevitably will be substantial.
And what about the financial part of all this? Job loss is now measured in the millions, impacting tax revenue at every level of national, state and local governments. Much of this loss will ultimately be traced back to the real estate market, including the hard-working real estate professionals whose income and careers have been upended.
The one bright light for the real estate industry has been its ability to pivot to electronics to market and close properties. Agents all over the country are running virtual open houses and creating video tours for available properties. Video chats are taking the place of conference room meetings and available digital mortgage platforms can remotely verify employment and assets. A decade ago, the housing market would have been completely shut down during a situation like this; now at least everyone can move forward, even if at a slower pace.
So, no sneezing in public – we all have to do our part. As far as the real estate market, we don’t really know what the future is and neither does anyone else. Stay safe and wear a mask.
