How can Real Estate be Booming... During a Pandemic & an Evolving Recession?

This is a question I hear often from friends, relatives, and clients. Its a great question. During a recession, not all parts of an economy always slump. During our last Great Recession, real estate was part of the catalyst which caused a global recession. This is the reason the real estate market cratered – along with fiscal mismanagement (and probably corruption) in the banking sector and on Wall Street – which led banks to the point of almost failing until the taxpayers bailed them out. This time is different.

This time, the catalyst is a global pandemic. The Coronavirus has really had a huge impact on an otherwise healthy economy. While some sectors of our economy like the airlines, vacation industry, hotels, restaurants, etc – might be impacted to a greater extent than other sectors of the economy. This is because the pandemic is impacting those industries directly. People don’t want to sit in crowded restaurants, or on crowded enclosed airlines for example.

In the case of Real Estate, it is actually helping to create a booming Real Estate market. It is creating an exodus from major cities and more populated areas – and motivating a lot of one-time city dwellers to pack up for the hills… literally. After having been cooped up in their apartments for months, with time to rethink their living conditions, many have decided to look for greener pastures – no pun intended. We have had several clients moving from more populated areas recently looking for “space”.

To add to the boom, there have been decades of pent up demand on the buyer’s side of the Real Estate market. Millennials, who came into adulthood amidst the September 11th attacks, the decades of war following, and who were trying to build careers when the Great Recession hit, have been largely holding back making the traditional moves their parents and grandparents made ay a much younger age. Not to mention the challenges of being saddled with more debt than any other generation in history – with college loans and the growing cost of living. Many studies have shown the extent to which Millenials have held off on getting married, having kids, making career moves, buying houses, etc. It has created a situation in which, a large portion of the population has had the ability to buy a home, but has chosen not to… until now.

What happened to the shortage of houses for sale? There still is a shortage of available homes for sale in many markets. Especially in suburban markets. However, as baby boomers catch on to rising home values, many are beginning to think – maybe this is the time to downsize, and get that little cottage near the beach, or in the mountains, or to move to Florida. So in essence, there was pent up demand on the Seller side of our Real Estate market as well. Many people, nearing or in retirement, have been waiting for an opportunity to cash in on their home and downsize, or move to a more desireable and enjoyable location… like the beach.

So in conclusion, the Real Estate market is booming because of pent up demand – from buyers AND sellers. The Pandemic only served to hasten people’s plans. It is influencing younger buyers to seek more space – a yard, a bigger home (so they don’t go crazy from their little kids howling like dogs behind them — like mine are right now), bigger houses in general. Due to this rise in demand from buyers, many potential sellers are seeing their opportunity to cash in – and go live the good life on the beach.

~Eric Coury is a Realtor licensed in Rhode Island and Southeastern Ma. Visit www.EricCoury.com to learn more.

**Disclosure: The views and opinions expressed in this blog are those of the author alone and do not represent the views or opinions of Keller Williams. The contents of this blog are not meant to be interpreted as individualized advice. Please consult your tax advisor, attorney, broker, and/or financial advisor for specifics on your situation. Copyright © Eric Coury, Colonial Classic Realty LLC