How Will COVID-19 Impact the Future of Real Estate?
Recently, we discussed the short-term effects of COVID-19 on the real estate market. But coronavirus will certainly also cause long-term changes in our habits, lifestyle, homes, workplaces, and cities. That means, inevitably, it will impact the future of real estate, too. Here are 5 areas where real estate professionals should keep an eye out for change.
#1: Fewer Barriers to Online or Remote Closing
All business has been shifting towards digitization over the last decade, and real estate is no exception. But certain parts of the real estate process remained stubbornly old school. Government bureaucracies and conservative industries like banking are more reluctant to adopt new ways of doing business, but the pandemic has forced them to adapt.
Critical steps that previously demanded face-to-face visits have gotten temporary go-aheads for measures like virtual notarization, desktop appraisal, and drive-thru or video closings. Some of these compromises, like virtual home inspections, will inevitably be walked back because they're less effective. But for others, this may be the final nudge we needed for permanent change.
#2: Comprehensive Online Listings and Virtual Tours
In a world where we're Safer at Home, no one wants to bring strangers into their sanctuary. In some states, tours and showings became illegal; in others, they simply became unpopular. Either way, the result is the same: the expanded use of virtual tools. Video previews, 3D models, and virtual tours have been around, but adoption has been patchy.
Six months ago, these tools were luxuries, but now they're invaluable stand-ins for open houses and walk-throughs. That doesn't mean we're headed for one-click online home buying, obviously. But these stopgaps could very well reset the expectations consumers have for online listings. Clients will expect digital tours and other visual previews to assist them in the early sorting process. In-person showings will be reserved for properties they're really serious about.
#3: Reconsidered Priorities for Where We Live
We all got a three-month primer this year in just how livable our homes are, and priorities have shifted accordingly. Early on, this manifested as a run on home improvement stores. In the long run, it will inform the features we look for while house-hunting and the way we build new homes. A lot of it boils down to "as much space as you can afford." No one enjoys being cooped up for weeks in a 400 square foot efficiency.
Home offices will probably be a priority for anyone who can work from home. Safe, semi-private outdoor spaces like yards, balconies, and front porches are also incredibly attractive. COVID-19 won't just shape what we seek out – it will also shape what we avoid. That may include city living.
Many of the attractive elements of urbanization are suddenly liabilities. While there's an argument that urban density is beside the point, fear of crowding is a powerful psychological trigger. Along the same vein, the popularity of retirement communities may subside, given the grim statistics from care facilities. Older homeowners may rethink the wisdom of congregating with other vulnerable people and choose to stay put in their own homes.
#4: Changing Commercial Spaces
Indoor public spaces are suddenly a risky venture – both for the people within them and the investors that own them. Demand for retail space was already shrinking, but the pandemic really tipped the scales in favor of online shopping. Recovery may take a long time, and small businesses, in particular, will continue struggling to pay rent.
On the flip side, the shift puts industrial spaces in greater demand. That doesn't just apply to fulfillment warehouses. Most restaurants are now, functionally, ghost kitchens with unaffordable rent. The concept of delivery-only restaurants – and the demand for industrial spaces that support them – may gain traction in this new world order.
We will almost certainly need to rethink office spaces. Dense open office floor plans are a proven source of infection through contact tracing. Individual offices with closed doors represent the safest option for disease transmission, but that's impractical for most businesses.
The truth is, we don't know what comes next short of new innovations. Very likely, there will be technological advancements in the future that resolve or mitigate the concerns of commercial real estate. Property owners should prepare themselves for making potential investments.
#5: Increased Demand for Communal Outdoor Spaces
Sunshine may or may not be superior disinfectant, but fresh air definitely lowers your risk for coronavirus. All over the world, cities are trying to retrofit current spaces for outdoor activities. Some jurisdictions are considering the need to widen sidewalks.
In the meantime, streets are being coopted for exercise or gathering space and parks are more popular than they have been in years. Following this trend, access to outdoor amenities will probably feature prominently in the future of real estate, whether we're talking about private communities, commercial spaces, or urban planning.
The Bottom Line
The future is more uncertain than ever in the face of COVID-19. The only way forward is to educate yourself as best you can and prepare for likely possibilities. As a trusted online training provider, AgentCampus by 360training can help you continue your professional development and real estate continuing education from the safety of your own home. Check out our approved offerings in your state today!