The pandemic has changed our lives, our economy, and our workplaces in many ways. Looking ahead, its impact may be widespread and long term for a variety of industries. Nowhere is this more prevalent than in the real estate industry.
In recent months, tech companies such as Facebook, Twitter, Square, Dropbox, and Stripe have announced that they are giving employees the option to work from home on a permanent basis. Workers who take advantage of this option and then choose to relocate out of their expensive cities may be required to take a commensurate pay cut. (1)
According to a recent survey by Upwork, the largest cities in the country may see a corresponding exodus as people choose to work remotely in less crowded and less expensive parts of the country. (2) Last August, New York City reached a record-high number of residential vacancies. (3) San Francisco rental prices have dropped by 11%.(4)
Commercial real estate has been affected as well. For example, since the pandemic struck, New York has seen more than 1,200 restaurants close permanently. Due to reduced business travel, some hotel chains are poised for bankruptcy. And companies offering remote-work options may downsize to smaller commercial spaces. (5)
However, these scenarios paint only part of the real estate picture. With so many city dwellers on the move, lower real estate prices could make it more affordable for other people to move into metropolitan areas. Zillow does not expect those vacancies to be left empty. It predicts 2021 will bring the biggest annual sales growth since the early 1980s, with the COVID vaccine rollout and expected economic recovery helping drive home sales. (6)
If you’re considering putting your house up for sale, we can advise you on the many options available to use surplus assets to create a confident retirement income stream for the future. Just give us a call; we’ll be happy to help.
Another trend that could be the wave of the future is community living. (7) This option addresses the needs of aging baby boomers, cohabitating millennials, and people who just want to stay connected to a close-knit community. For example, seniors may wish to live in a co-operative housing community, but not necessarily one with a common dining hall and laundry room. We learned just how fast and lethal the coronavirus spread through nursing homes, so separate residences that still offer shared services may be more desirable in the future.
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1 Jane Lanhee Lee. Reuters. Oct. 29, 2020. “Up to 23 million people in U.S. could move thanks to remote work, survey finds.” https://www.reuters.com/article/us-health-coronavirus-remote-work-survey/up-to-23-million-people-in-u-s-could-move-thanks-to-remote-work-survey-finds-idUSKBN27E26X. Accessed Jan. 11, 2021.
2 Ibid.
4 Steve LeVine. Marker. Sept. 1, 2020. “Remote Work Is Killing the Hidden Trillion-Dollar Office Economy.” https://marker.medium.com/remote-work-is-killing-the-hidden-trillion-dollar-office-economy-5800af06b007. Accessed Jan. 11, 2021.
5 Ibid.
6 Zillow. Dec. 18, 2020. “Bold 2021 Predictions: A Stronger Housing Market Across the Board.” https://www.zillow.com/research/zillow-2021-housing-predictions-28516/. Accessed Jan. 11, 2021.
7 Kirsten Stevens-Wood. World Economic Forum. July 20, 2020. “Co-operative housing: A greener and more sustainable way of living?” https://www.weforum.org/agenda/2020/07/communities-communal-living-cooperative-housing/. Accessed Jan. 11, 2021.
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