In recent years, the housing market has seen a lot of changes brought about by the pandemic. Suddenly, people were forced to stay at home, borders were closed, and the governments imposed quarantines to help contain the virus.
With the challenges at hand, many companies were forced to adapt, including those previously opposed to the concept of working from home. Thus, the rise of remote work completely changed the game on how organizations do business.
As more and more people switched to working from home, people have had to make adjustments, such as investing in a home office setup and dealing with the increase in electricity bills and other utilities, among others. And because they were suddenly allowed to work remotely, some people decided to become digital nomads, giving up on their monthly rentals while some sold their houses.
Photo by Ronnie George on Unsplash
However, home sales significantly dropped during the pandemic as more people were reluctant to give up their homes, and mortgages surged. In the US, new home listings were down 35.4% in November 2022 compared with 2021. According to Redfin, a residential real estate brokerage in the US, this led to a 17% decrease in the inventory of homes for sale.
Price increase of homes and rental properties
Despite the decrease in new listings, there has been a significant increase in prices for new homes and rental properties, mainly from remote workers hired by companies who adopted the “work from home policy.” It caused a great demand for rental properties in urban and rural areas too. The high demand spiked the prices in many cities, including San Francisco and Seattle.
So if you’re planning to relocate to another town or city expect the real estate price has gone up these days. You need more research and planning before taking action. One effective way to do it is by using a mortgage estimator in your research to have a good idea of your overall expenses.
Another excellent example of how remote work changed real estate is the presence of digital nomads in cheaper cities around the world. Just like what happened to Lisbon, one of the hottest digital nomad spots in the world. The locals have started to notice and complain about the effect of inflation on rent and services. Most digital nomads, especially from the US, are earning more and willing to pay more, thus the increase in demand and prices.
The impact on commercial real estate
Perhaps the most affected by the changes in real estate during the pandemic is commercial real estate. As people and businesses moved to a work-from-home setting, many commercial buildings either lost their tenants or struggled to keep their clients. Lease payments had been quite challenging as many tenants, especially those whose businesses had been greatly affected by the pandemic, had difficulty settling their leases.
And those commercial spaces that had to be closed during the state-imposed quarantines, such as malls, hotels and lodgings, and restaurants, had to deal with the loss of income during this period.
Indeed the challenges caused by the pandemic brought about changes to how people do things. While it may not have been a great time, lessons were learned, and people had to think outside the box to make things work. In real estate, they discovered the importance of sanitization in all establishments, technology for business continuity despite limiting in-person interaction, and adaptability to situations that disrupt the norms (in this case, the pandemic).
Remote work is now possible and is here to stay. And it’s incredible to see that real estate is perfectly capable of working around it.
