Our team of real estate experts is closely monitoring how the coronavirus is impacting the US housing market. We’re continuing our coverage of the coronavirus with our analyses of the interaction of The Coronavirus and The Rental Market.
What is COVID-19
The potentially lethal flu-like respiratory illness, the novel coronavirus 2019 (otherwise known as COVID-19 or simply The Coronavirus) was first identified in Wuhan, China in late 2019. Since its genesis, the Coronavirus has traveled through Asia, Europe, and America at lightning speed. In its wake, it has left over 150,000 infected, 7,000 dead, a news-cycle dominated by its presence, and a very uncertain global economy.
How will COVID-19 interact with the housing market?
In the early days of the Coronavirus’ spread, realtors increased safety precautions at open houses and reported only a modest slow down in buying-interest. Low mortgage rates lured homebuyers into For Sale homes, and home buying is, after all, a months-long process. However, the virus’ lightning speed has resulted in an unprecedented up-ending of American public life (and rigorous hand-washing and social distancing). As a result, Americans are spending hundreds on necessities, frozen food, and cleaning supplies. Large purchases must wait.
An even more ominous sign: rising unemployment. As B2C companies reduce their hours or are forced to shut their doors to weather the storm, employees across America face economic uncertainty in a time of global panic.
However, we must be wary of speaking too soon. The housing market was robust before this crisis, it may rebound with force. We cannot make any stable, long-term predictions. What we do know is that risk-adverse consumer spending is certain for the foreseeable future.
Is there a big recession coming?
We’ve already entered an economic downturn, yes. However, long-term economic predictions are currently predicated on the movement of a virus, our ability to adapt, and local and governmental actions. We don’t know for sure.
With the stock market in a free-fall and the possibility lay-offs looming, forecasts are looking glum. President Trump even acknowledged the possibility of recession in his. However, America’s economic and politic institutions are quickly maneuvering to cushion the impact of this crisis.
“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” the Fed said. “In light of these developments, the [Federal Open Market] Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent.”
They also announced they would buy $700 billion in government securities.
The senate is expected to pass a second bill aimed at relieving the struggling economy, assisting strained public health systems, and helping vulnerable Americans stay afloat. The bill would ensure free Covid-19 testing, paid emergency leave, increased Medicaid funding, and increased funds for food stamps. The bill will also expand the unemployment insurance program. A third bill that will add another $1 trillion into Coronavirus relief.
However, it remains to see just how successful these measures will be. As public life grinds to a halts, small businesses and large enterprises alike will feel COVID-19’s economic impact.
The Coronavirus and The Rental Market
Even if the dark shadow of a recession descends onto the American economy, rentals have historically proved to be a safe-haven for Americans seeking flexibility and affordability.
“Right now, there’s a lot of fear and uncertainty,” Rental Beast founder and CEO Ishay Grinberg says. “During these times, Americans need to flexibility and affordability of rentals. We’re looking at a difficult economic future right now, and have seen rentals provide real estate agents with a solid stream of income.”
Who is renting right now?
Some people are still renting in the midst of this crisis. As more shelter-in-place orders are issued, you can help these potential clients get into an apartment that suits their lifestyles quickly.
Many students whose universities have moved to online courses and abruptly shut down dorms are facing seriously housing insecurities.
Similarly, many may have not renewed their leases in anticipation of making the leap into homeownership during what has previously been promised to be an exciting home buying season.
Real estate agents can reach out on Facebook and other social media websites, to let students know that you know of rental vacancies that need to be filled, and would be happy to help them through the leasing process.
Will rents increase?
In the long run—maybe. Historical data tells us that, if the economy descends into a recession, rents rise as supply dwindles. However, considering interaction of The Coronavirus and The Rental Market many landlords and property owners are putting compassion first, and cutting rent prices to accommodate struggling workers.
Many landlords are also offering to pay agents broker fees to agents ready and willing to find clients to fill their vacancies.
What can you do right now?
Reach out! See if anyone in your circle desperately needs to move right now. Let them know that you’ll be happy to help walk them through the leasing process. With Skype, online showings, and online application engines (like Apply Now by Rental Beast), there are still ways to continue your housing hunt and abide by all necessary social distancing rules.
We might need to take time to see the interaction of The Coronavirus and The Rental Market. However, it’s time for all of us to do our part to help the global health crisis right now. While you may not be at risk for contracting the coronavirus, or may feel that your risk of death is low. The best thing you can do to limit the spread of COVID-19 is to follow state regulations and enforce social distancing.
This is not fear-mongering. This is not an overreaction. Social distancing may be painful and difficult; however, we know from the experience of other countries currently battling coronavirus outbreaks that social distancing and hand washing are the two most effective (and simplest!) steps everyone can take to reduce the spread of The Coronavirus.
See your client on a screen, not in real life. Use Skype, Zoom, G-chat, FaceTime.
In the next few day, you may still b interacting with your client one-on-one, or in a small group setting. If so, make sure to bring pocket hand sanitizer for everyone’s comfort and health, and trade hugs and handshakes for the friendliest of waves.
Advise Your Clients
If your clients are still concerned about having their money tied up in such a large purchase, let them know that the home buying process is a long one, and that renting may. If they still want to move, make sure they know that renting may afford them the flexibility and affordability that they need during these difficult times.
Be compassionate, empathetic
Now is the time to come together as a community—on a local and global scale. If possible, consider what you can do to help the most vulnerable members of our society stay healthy and supported. If your comfortable doing so, you may want to reach out to older clients and let them know that you can run deliveries for them.
Of all of the stories that have made news in the past few weeks, the most striking are the stories of compassion, unity, and community. Even agreeing to social distancing,
And, take time for your own mental health. Spend time (or FaceTime) with the family members and friends you love. Express your gratitude.
We know that much of your business has been affected by The Coronavirus, and will continue to be affected by its spread and the necessary limits places on public life. Rental Beast is a platform built by agents for agents, and our real estate experts understand how stressful times of uncertainty can be for real estate professionals all around the country. We stand ready to help you grow your business, and carry on.
Learn more at Rental Beast for Real Estate Agents