3 Key Trends Affecting the Real Estate Market
“As seen in the Real Estate Reality Column in the San Leandro Times & Castro Valley Forum, written by Carl Medford”
As the pandemic progresses, we are seeing trends emerge. Here are 3 key issues affecting the real estate market:
- Young adults are returning home in record numbers.
Since many lost jobs employed young adults, this demographic has been impacted more than other age groups. With unemployment at record high levels, those who have lost jobs have been unable to make rent payments. The logical move for many has been back home. A September 4, 2020 Pew Research Center article by Richard Fry, Jeffrey S. Passel and D’Vera Cohn states, “The coronavirus outbreak has pushed millions of Americans, especially young adults, to move in with family members. The share of 18- to 29-year-olds living with their parents has become a majority since U.S. coronavirus cases began spreading early this year, surpassing the previous peak during the Great Depression era.”*
- The rental market is taking a serious hit.
Keying off the first point, the rental market is softening as many landlords have been unable to collect rents. Factor in the COVID-related moratorium on evictions and many landlords are seeing significant shortfalls in income. As a result, large numbers of landlords are considering liquidating their assets to recoup losses. Our team has already been approached by investment owners who want out of the rental business. We are also seeing increased vacancy rates as increasing numbers of young adults pack up and head back home.
- The housing market continues to sizzle.
In light of the continuing pandemic, many have asked a fundamental question: “How is it possible the real estate market is overheated while other sectors of the economy are declining and all indicators state we are in a recession?” It is a valid question and has some fundamental answers. In reality, the COVID-19 crisis is affecting people on two different levels. While many on the bottom of the economic scale have lost their service-related jobs (food-services, hospitality, transportation, tourism and so on), those on the other end of the scale (essential service providers, tech workers, professionals, etc.) have been employed consistently through the crisis with no reduction in pay. It is this group that is out looking for homes and, since we currently have a significant shortage of inventory, prices are being pushed up in a classic display of supply-and-demand economics.
While some restrictions are easing, one thing is clear – things are going to continue like this for the foreseeable future.
Carl Medford is a licensed Realtor with Keller Williams Realty and a licensed general contractor. This article is sponsored by the Central County Marketing Association.