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May
18

The effects of the COVID-19 pandemic were felt worldwide in many significant ways. COVID-19 became a humanitarian challenge that continues to have lasting effects on how we live, work, and play.

From how we shop, learn, and communicate, to where we live, the pandemic touched every area of our lives and forced us to adjust to a new reality. In the first days of the pandemic, the economic uncertainty, health concerns, and stay-at-home orders, many metropolitan areas experienced a noticeable drop in home sales. As the pandemic took hold in April and May of 2020, nationwide home sales dropped to their lowest levels since the housing and financial crisis in 2008.

Driven by the pandemic, the real estate market shifted dramatically. Low inventory, the ability to work from anywhere, low-interest rates, and the many government stimulus measures flooded the market with liquidity. With low supply and lots of cash in the system, prices exploded in many markets.

The Summer of 2020: Demand Recovers, Supply Remains Low

By the summer of 2020, after the initial shock of the lockdowns, potential buyers started to increase their housing search and purchase activity by the end of May. By summer, sales began to approach pre-pandemic levels. Pending sales in U.S. metro areas were down more than 30% in April were up almost 30% over 2019 sales by August, aided by the increase in online and socially distant viewings.

While sales recovered relatively quickly, the way homes were shown and the demand for various types of space had changed.

Early Effects: Shifting Priorities

Physical distancing directly changed the way people were inhabiting and interacting with physical space, in addition, the effects of the pandemic had made the demand for many types of properties like retail and office space go down, perhaps for the first time in modern memory.

The abrupt economic recession, economic uncertainty, and steep job losses changed the market. Even today, as we begin to emerge from two years of pandemic disruptions to the economy, there is much discussion about how the pandemic has reshaped the nature of work and home.

Workers who remain able to work from home are placing less value on a shorter commute and have or are moving farther away from the office. Families are looking for amenities, like swimming pools and swing sets, instead of community amenities like parks or stadiums. This shift places a higher value on a property's specific characteristics and less on its location. The landscape is still adjusting to the new Covid reality, and it is not yet clear if these types of shifts will be permanent or will return to pre-pandemic norms.

One thing is certain, the COVID-19 pandemic has shifted how home buyers and sellers approach the process.

Technology and The New COVID Reality

One significant change that will most likely remain is how buyers and sellers negotiate the real estate process. The lockdowns, distancing, and subsequent government mandates severely impacted traditional techniques like physical walkthroughs of properties and open houses, as-well-as in-person closings, and other legal transactions related to a sale.

Pandemic-related disruptions and the need for social distancing have accelerated the trend toward digital technologies in the home buying process. From house hunting, VR walkthroughs, and video presentations, to applying and securing a mortgage, notarizing documents, and signing final closing papers, the virtual home buying and selling experience is becoming more common. The virtual trend is especially prevalent among millennials who are increasingly buying homes sight unseen.

As a result of the pandemic and its effects, industry experts agree that new socially distanced tools and methods to facilitate sales may be here to stay, including:

  • Virtual walkthroughs/tours
  • High-quality photography
  • 3D mapping
  • Drone Surveys
  • Video conference and calls - for showing properties as well as more mundane aspects of the deal)
  • No-Touch, curbside closings – for example with DocuSign
  • Online and drive by appraisals
  • Remote online notarization
  • Smart contracts/contract sharing platforms like DocuWalk

Some of these new methods may be temporary, but the truth is, the process for selling homes will likely never be the same in the new post-COVID reality.

"All the technologies that we have built for virtualizing a home and virtualizing the closing process will just keep growing in importance in a post COVID reality." - Ken Kelman, CEO, Redfin

The trends like listings stuffed with high-quality photography, virtual showings, curbside, and no-touch closings, and buying homes without stepping foot on the property are going to be here for the long term.

A recent survey conducted by realtor.com found that 59% of millennials said that COVID has changed the way they are approaching their home buying search. The survey found that:

  • 37% are spending more time researching online
  • 35% are spending more time looking at listing photos
  • 32% are spending more time watching listing videos
  • 31% are being selective about the homes they choose to tour
  • 27% are doing drive byes to check out the neighborhood

As buyers and sellers become more comfortable with virtual tools and the new post-COVID reality of the home shopping experience, many of the new methodologies may be here to stay. Or will at least be used in conjunction with in-person transactions as we slowly return to a new post-pandemic normal.

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