No one can predict uncertain events, so uncertainty gives us a hard time. Coronavirus (COVID-19) is changing the real estate market in the United States significantly and experts are already trying to predict, what could happen next? Will the market suffer any consequences?
The global economy is suffering, that's no secret. The world's second-largest economy is in trouble since it has reported thousands of outbreaks and deaths caused by the disease. Therefore, supply chain disruptions have been reported which can result in a predicted global loss of $2.7 trillion, according to Bloomberg Economics.
Now, how can this affect the real estate market in the U.S? If we consider that China has been the largest foreign real estate buyer as for 2019, predictions are investors activity can have a surprisingly positive impact. There have been economists that believe that the trade war and the lower inventory season are reasons for having a decline in China's investment in real estate, however, investors are buying assets in the U.S possibly due to low spreads of the disease in the country (compared to Asia or Europe).
On another hand, predictions point out that if the U.S suffered from a full-outbreak, sadly, commercial real estate could get hit. Obviously investors would prefer staying indoors, resulting in a decline in production and development.
Actions taken by Commercial real estate companies include reducing the spread of the virus, trying to keep employers healthy and recommending clients to invest while the market is favorable.
Unfortunately, the virus is spreading continuously in the United States, although lower interest rates are helping borrowers with home acquisition, predictions indicate things will not stay as they are in the long-term.
For now, probabilities that the markets remain uncertain are high. The residential market is still looking good, and because of low inventories housing is selling fast.
Bottom line is, that for now, the market will remain slightly the same. The major impacts on the real estate market will depend on the speed of the widespread of the virus.
- The Federal Reserve cut rates by a half percent due to fear of the virus.
- Last week the three major U.S stock markets lost over 10% of their value.
- The Senate approved an astonishing amount of $8.3 billion as funding for emergency contingency due to the coronavirus.
- At the beginning of the month, the treasury yield falls below 1% for the first time.