The nation’s real estate market has seen its share of winners and losers in 2020, thanks to the coronavirus pandemic. But the truth is, it could have been worse.
After COVID-19 surfaced in the U.S., infections, hospitalizations, and deaths from the virus led to the forced closure of much of the country. For most of the spring, the nation’s economy slowed significantly. That meant bad news for residential and commercial real estate markets across the U.S.
But going into summer, residential real estate started to come back to life. While much of the commercial real estate market continues to struggle, there are some signs of optimism, according to industry veterans like Paul Daneshrad, CEO and founder of StarPoint Properties, a California-based real estate investment firm.
Here are some key winners and losers in real estate from 2020.
1) Home sellers
As the nation’s economy took a beating in 2020, those home sellers who braved the uncertain market fared pretty well. The National Association of Realtors reported strong sales compared to the previous year, with existing-home sales increasing for the fifth consecutive month in October to a seasonally-adjusted annual rate of 6.85 million. Sellers enjoyed higher list prices than the previous year, sold their homes faster and some received multiple offers for their homes, according to the Realtors group.
2) Commercial property owners
The economic struggles created by COVID-19 hit many commercial property owners hard. Those interested in selling saw the market collapse as continued uncertainty among businesses made most buyers wary. Daneshrad said he believes the problems will continue in the commercial real estate market into 2021, in part because of the lingering economic hardships businesses continue to face as the pandemic rages on.
Soon after the coronavirus began spreading in the U.S., the federal government stepped in to help renters who may have lost income due to the pandemic. As governments ordered shutdowns and businesses laid off workers, the federal government offered renters relief by imposing an eviction moratorium through 2020. That meant even if renters fell behind on their monthly payments, they could not be forced out by landlords. Some rents also dropped during the year because of plummeting values of commercial property and an exodus in some urban areas like New York City and Los Angeles of residents looking for more affordable space in suburban and rural neighborhoods.
If the nation’s home sellers are winners during the 2020 coronavirus pandemic, then buyers certainly are losers.
It turns out if you were looking to buy a home in 2020, you probably paid more than you would have before the pandemic, you had fewer options and you likely had competition from other buyers. As the national Realtors group reported, inventory of existing homes for sale was down significantly, in part because some home owners interested in selling were wary and because buyers who were looking quickly snatched up what was available. Even lower rates on mortgages didn’t benefit buyers as much as expected because list prices on homes also increased, wiping out that potential savings from a lower-interest loan for a buyer.
5) Warehouse and distribution center owners
It wasn’t all bad news in 2020 for the nation’s commercial real estate market. Some segments will benefit from changes in the economy caused by COVID-19, Daneshrad and other experts noted. Owners of cold-storage warehouses, distribution centers, and remote-work office space will see continued interest in their properties due to shifts in consumer and business behaviors.