It’s been more than five weeks since Gov. Phil Murphy (D-NJ) issued a stay-at-home order for the Garden State’s 9M residents, closing schools and all non-essential businesses, in an attempt to flatten the curve and slow the spread of #COVID-19. As NJ and other states cogitate a plan for re-opening, there’s a harsh truth to swallow – life as we knew it may have been forever altered. For better or worse, the way we’ve been forced to engage, shop, work, educate, socialize and live our lives over the past five weeks may be the beginning of the new normal. While I’ll leave reflections on much of the above to other talking heads, I will offer some opinions on what I know best at the moment – real estate. Here’s some thoughts on how I suspect the real estate industry to change as a result of the pandemic.
1. Virtual is the new reality in realty
With social distancing being the linchpin in combating the virus thus far, traditional open houses and showings have been replaced by virtual ones. The truth is, open houses do more to feed realtors’ databases than sell homes, and, if done correctly, technology (drone videos, Matterport, etc.) can show you all you need to know about a home. In fact, the entire closing process can be done virtually with the exception of a wet signature needed for the deed (we’re working on that). Does this mean you have to buy a home without actually seeing it? No, once you’ve narrowed your search to “the one” your realtor can set up a private tour with all the safety precautions. Don’t forget, you still have the option of a home inspection to protect you from purchasing a lemon.
2. Location will become less of a priority
Location, location, location, right? Maybe not anymore. While school systems may still drive some home searches, the ability to telecommute opens up a host of options for home-buyers. As more companies switch to remote workforces, home-buyers can trade in that apartment/condo near the train for abodes that offer more indoor/outdoor space (more on that later), access to nature (think hiking trials, lakes) and more distance between you and your neighbor. You can finally get that spacious home in the burbs without having to commute for an hour!
3. Space will become trendy again
Save for a small dip in the 1950s, the average home size had increased each year for most of the 20th and early 21st centuries. During the past decade, however, the size of new construction has decreased to meet demands of millennial buyers. With a proclivity to travel and value experiences over home ownership and upkeep, this new generation shifted how builders constructed and marketed new homes. Modest homes front-loaded with wine fridges, video doorbells, low maintenance- backyards built for entertaining strategically placed in trendy downtowns became highly sought after. I suspect that will change as greater value becomes placed on physical space and distance from neighbors. Even as I type this – with one kid hanging on my legs and the other getting ready to attempt a jump from the couch we both know she’s not ready for – I’m reminded of the need for space, if only to give the kids more options as we exercise social distancing. A backyard with a fire pit will be more in demand than a home near that cute coffee shop with the delicious almond croissants.
4. Commercial real estate may take a hit
I suspect the workplace as we knew it has been forever changed. While we’ve had the technology and systems in place to work remotely for quite some time, dinosaur organizations still clinging to the old ways of doing things will be forced to comply to the virtual marketplace. There will be less need for office space, conference rooms and even retail space as many will be forced to switch to online retail models. If you own a commercial asset, I have some ideas on how to re-purpose your building to maximize returns in the changing market. Let’s talk (I can’t give it all away for free 😉)!
Well, there you have it! You now know what to expect and how to adjust. You’re welcome (*Maui voice). If you’re considering acquiring or liquidating an asset, please reach out, I’d love to help! Please stay safe and healthy.
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