With the pandemic at its full swing housing has been a mix in the past few weeks. We went from 30 showings on a starter or first time home buyer listing to maybe a handful or no offers on the home.
Style of homes that may hit hard if unemployment and global pandemic continue:
Vacation Homes: Your ski, beachfront or lakefront properties are always the bottom of the barrel to recover for obvious reasons. People will give up travel and vacation to weather the economy hit. Many of these property locations are driven by the local economy aka tourist industry. If the overall recovery remains sluggish by the end of 2020 the impact on vacation homes may be felt well into 2021.
Short Term or Airbnb Investments: These are not your beachfront vacation homes but condos or homes investors renting for a short period near major cities or business centers. Similar to vacation homes keeping up with the investment, high condo or management fees with a huge shrink in travel will deeply impact the short term rentals. Even if the economy improves many businesses may cut back on travel. Also, the hotel industry may have higher leverage to discount their rentals over Airbnb or VRBO.
Condos: Similar to after 2008 housing market crash condos were last to recover. The reason is condo dues, pet policies, regulation, and restrictions turn off the buyer. Hypothetically if a buyer wants to buy a $250K condo with a $500 condo fee. The house hunting home buyer may consider buying a $300K townhome. It may not be in the prime location but they will earn larger square footage and not tied to non-taxable unpredictable increasing condo dues, its rules and regulations.
Fixer Upper- Apsired by nation television many of the local DC Metro Realtors have been working with investors who were looking to flip properties. Even major companies like Zillow iBuyers have pulled back on acquiring properties. With uncertainty in the housing market, these properties may be less desirable due to a lack of demand and investors vanishing from the real estate market place. First time home buyers are always wanting a turn-key condition home.
Mid-level Luxury homes- I am not talking about the glittery fancy top of the cream sort of real estate properties. I am talking about mid-level for my Northern Virginia area of Fairfax and Loudoun county $1.5M-$2.5 Million Dollar price point homes. Consumers may want to settle for a lesser expensive or if they are currently living in a modest square footage home they may opt for major renovation rather than upgrading. Even if someone would love to upgrade they may reconsidering carrying two mortgages. Homebuyers don't want to be stuck with 2 homes with the uncertainty in the housing market.
I have been on the roller coaster ride of 2008 in our local Fairfax and Loudoun County and we all know real estate investments are long term and driven by the local economy. Be safe and healthy at home!