2020 has been a challenging year for everyone, but especially for those who found themselves sheltering in place in a too-tiny home, or stuck in a city that completely shut down due to COVID-19. In major cities, I’ve seen a huge uptick in people retreating to their more spacious suburban homes, which were usually reserved just for summertime or vacations. That’s a great workaround if you have one, but for those who didn’t, what was the solution? Surprisingly enough, it was packing up and moving in the middle of a pandemic.
There are people all over the country who are swooping in to buy real estate while prices are at rock bottom. With the market slow, the economy weak, and many sellers also eager to move into new places, buyers are getting fantastic deals on homes they might not have been able to afford just one year ago.
Why are so many people moving in the middle of a pandemic? Here are three (pretty smart) reasons:
1. Real Estate Prices Dropped Dramatically
Let’s look at one of the highest-priced markets in the country for reference, New York City. In the second quarter of 2020, NYC real estate sales fell by 54 percent – the largest decline in 30 years, according to a report by Miller Samuel and Douglas Elliman.
With low activity, desperate sellers, and an economic slump, the market shifted quickly and completely to the buyers’ favor. The median sales price in NYC dropped to just $1 million, 18 percent lower than the previous year’s stat for Manhattan.
It was the biggest price decline in the past decade, and many other cities and towns saw similar declines. Over in California, the Orange County Register reported a 5.2% price drop compared to last year – the biggest decline since 2009. According to a report by Curbed, this is on par with the dip we’re seeing across country-wide; Housing data company CoreLogic CLGX predicts there will be a 6.6% year over year price drop nationwide by May 2021.
2. People Realized the True Value of a Home
It wasn’t just that people were “stuck” in their homes during COVID-19 and suddenly decided to upgrade to a bigger one. It was something deeper: Home became our “safe” place during a scary time. Quarantine was the greatest accidental PR campaign for the value of real estate that I’ve ever witnessed. Now, people have been inspired to invest more into their homes and push their budgets just a little bit further.
3. Your Home Is Now Your Office
Aside from essential workers, the vast majority of people suddenly found themselves working from home when shutdowns began in March. Working from the couch or kitchen table without a proper office space can be tough, especially when square footage is limited (and shared with kids, partners, or pets).
Once it became clear that work-from-home culture was here to stay (at least for the near future), people realized they need more space. Luckily for them, upgrading to an extra bedroom has never been more affordable than it is right now. And there’s another financial incentive for the work-from-home buyer: When your home is also your office, a portion of your mortgage can be claimed on your taxes as a home-office deduction.
So although COVID-19 has thrown the real estate industry some curveballs this year, getting an incredible price during this economic downtime is the silver lining.