While the future is far from certain, it’s clear that the coronavirus pandemic is changing how people think about housing, technology and location.
As these are all critical to the future of the real estate industry, it only makes sense to try to get ahead of the trends that will come out of this moment.
That was the intention of a panel titled “The New Consumer” at the Council of Multiple Listing Services’ online conference held Thursday. Assuming the effects of the COVID-19 outbreak last for a year or two, Clelia Peters, a venture partner focusing on proptech at investment firm Bain Capital Ventures, told conference attendees she sees many potential shifts happening in a relatively short period of time. “We’re going to see a generation’s worth of changes and mindsets compressed into that two-year period,” she said.
Not only are new ideas and innovations going to come from this, but also, COVID-19 “is going to serve as an accelerant for trends that were already happening.” Market impact of inventory, labor and financing issues There was general agreement about the security of real estate, relative to other industries that have been hit harder by the pandemic. However, some of the issues that were already plaguing the housing market are expected to worsen. “I’m just worried about supply,” said Errol Samuelson, chief industry development officer at Zillow Group. “How long does it take for us to catch up?”
As the chief economist for the National Association of Home Builders, panelist Robert Dietz has been watching this question carefully. While he did note that it’s been a very difficult two months for the residential construction industry, the numbers could be worse. “They weren’t down as far as I’d forecasted,” he said, noting that activity levels in the sector were only down to around what was seen in 2015. Still, building has been suppressed since the recession of 2008, especially at the lower ends of the market, and this is not going to help that supply crunch.
Two key aspects that have long held homebuilding back are a lack of labor and financing. Dietz noted that, while national builders have Wall Street to lean on, “small builders that represent 70% of new construction, they’re going to have to get loans from a local bank.” In terms of finding new workers, the NAHB economist encouraged the industry to reach out to laid-off workers. “This is the moment to go all-in and try to recruit people into the construction industry.”
The city vs. suburb dynamic: More complex than it sounds While there’s been a fair amount of conjecture that this pandemic will encourage more people to move to the suburbs and rural areas, Samuelson said that’s mostly anecdotal at this point. “We’re not seeing that yet in the data,” he said of Zillow’s consumer research, adding that some of their internal data suggests that certain consumers “would like to be in an even more dense environment.”
However, construction data appears to suggest that builders are anticipating more people moving away from the core. Dietz said he’s already seeing increases in construction in suburban and rural areas at the expense of cities. Peters, who herself had decamped New York to be with her parents in Connecticut during the pandemic, did predict suburban areas may see more residents due to virus fears, and that, as a result, “We’re going to see coworking-style products move to suburban areas.”
But she made the point that it’s only a certain kind of suburb that’s positioned to attract former city dwellers. “It’s not your grandparents’ suburbs,” she said, adding that people coming from urban areas will want to take conveniences such … Read More
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