The global outbreak of COVID-19 has changed our lives in many ways. The direct impacts are most evident in our daily lives. In many areas, people no longer go out as much as they used to, or with nearly the same level of freedom. Many businesses in travel and leisure have closed. Social distancing, hand washing, and wearing face masks are a fact of life now.
These immediate changes also tie-in to other, more complicated adjustments. People spend differently during an economic downturn. The conservative-minded tend to tighten their grip on expenditures even further. On the other hand, those of a more opportunistic bent might feel like the present is an excellent chance to buy low or sell high.
These questions are pressing on the minds of many homeowners and real estate investors. Is the current climate of uncertainty a sign of opportunity, or are you better off holding on to what you currently have?
Don’t jump at the first opportunity
One of the biggest concerns facing most people is a matter of health and safety. We know that the coronavirus spreads quickly through contaminated surfaces and respiratory droplets. These factors amplify the risk when you live in crowded locations. Living in a condominium or apartment building, or in a big city, increases the odds of coming into contact with someone carrying Covid-19.
And people have responded with lifestyle changes based on these needs. Remote work is one of them. On the heels of that change, many have realized that if you can work from home, you don’t need to live so close to the office after all. Suddenly, suburban homes can look more attractive to a lot of buyers.
It’s dangerous to read too much into the early signs, though. While it might make sense on paper for city-dwellers to leave densely populated urban conditions, the numbers don’t show any difference. Months after the pandemic, urban and suburban homes are selling at roughly the same rate and generating the same amount of attention in online search activity.
Looking at historical stability
Of course, we’re living in extraordinary times. It’s natural for people to be a little jumpy; our usual way of living has been overturned. And amid financial uncertainty, the possibility of making a smart investment decision is more appealing than ever.
But instead of being swayed by potentially misleading information, you can base your decision on solid fundamentals and historical records. And history tells us a recession rarely affects the housing market. Other than the ‘Great Recession’ of 2008, which was directly caused by a housing collapse, home values tend to be unaffected. They can even go up.
Shelter is one of the basic human needs. People will always need a roof over their heads. If you buy or sell real estate right now, you’re making a bet based on information that’s difficult to read. But the underlying necessity will continue to drive prices in the long term. Over time, fluctuations will stabilize and revert to a new mean.
The ability to absorb risk
There are many variables to consider when investing in, or flipping, real estate. For one, there’s no such thing as a national market. It’s a good way to aggregate data, but when you consider the supply and demand from an individual buyer’s perspective, it’s meaningless.
People look for neighborhoods to live in. They compare prices across different homes within the area. An agent with experience in the local market can be well worth their fee on either side of the equation. Good staging and undertaking fixes can justify higher sale prices. However, buyers on the cheap end might be happy to take on a property with issues at a lower cost.
Everyone’s financial outlook will also be unique. Few people are really in the proper position to take advantage of any opportunity that this latest recession might bring. You need to have high liquidity and sufficient cash flow to see you through any further dips in the economy.
If that’s not the case, then consider your own needs. Is there any urgent reason forcing you to relocate? Because if that isn’t the case, you’d be better off investing your money in other areas. You could also make upgrades to kitchen cabinets and other frequently-used parts of the home with solid ROI.
Rather than see this pandemic-influenced, post-recession market as a period of opportunity, stay focused on your situation. You need the ability to absorb risks and adverse outcomes to leverage volatility. Without that, you’d be better off staying put and preserving your flexibility. In time, the market will always present more opportunities.