• The real estate industry is struggling to adapt to the post-pandemic new sector due to uncertainty in financing and more.
• Potential buyers face challenges such as job losses and pay cuts that make it difficult to get approved for financing.
• Rising home prices and mortgage rate fluctuations have made it difficult for first-time buyers to secure a loan.
• The pandemic caused an inventory shortage resulting in bidding wars and high prices, leaving many cash-strapped buyers without a chance to purchase their dream home.
The real estate industry is one of the most critical industries in the world. It is responsible for providing homes, apartments, and other property types to people who need them. In addition, real estate professionals help people find a place to live and invest their money in real estate investments. However, the industry is struggling to adapt to the post-pandemic new sector. Here are some reasons why.
Problems Faced By the Real Estate Industry Today
It’s no secret that the pandemic has significantly impacted the real estate industry. From remote work to economic uncertainty, the industry faces several unique challenges as we move into a post-pandemic world. Let’s explore some of the biggest hurdles facing buyers and sellers in the current market.
Uncertainty in Financing
The past year has brought about unprecedented uncertainty for many potential buyers. Between job losses, layoffs, and pay cuts, financiers are much more careful when granting mortgage loans. In addition, rising home prices have made it increasingly difficult for first-time homebuyers to get approved for financing due to their lower incomes and lack of equity. As a result, many would-be buyers have had to delay or abandon their home search until they have saved enough money or improved their credit score.
Mortgage Rates Fluctuating
Mortgage rates have been steadily dropping since 2017—that is, until 2020. The pandemic caused rates to surge due to increased demand resulting from low unemployment rates and historically low-interest rates. This allowed people with good credit scores to use the higher loan amounts available at lower interest rates. However, it also forced those with poor credit scores out of the market because they could not qualify for loans at higher speeds.
The pandemic resulted in a dramatic drop in housing inventory across all major markets due to reduced construction activity and fewer homeowners putting their homes on the market. This led to bidding wars as buyers competed over limited inventory and pushed prices higher than ever—leaving many cash-strapped buyers without a chance to secure their dream homes. In addition, with fewer options available, many prospective buyers have difficulty finding a property that meets their needs within their price range.
Less Open Houses
Because of safety concerns surrounding COVID-19, many real estate agents have stopped hosting open houses or drastically reduced attendance numbers at any events they hold. Unfortunately, this has made it difficult for buyers who prefer seeing properties in person instead of relying on online photos and videos alone—particularly when it comes to getting a sense of how spacious (or cramped) each property feels or getting an accurate idea of how much natural light each room receives throughout the day.
How the Industry Can Deal With These Problems
The industry is doing its best to adapt and overcome the challenges of the pandemic. Here are some ways that the industry can deal with these problems.
Since the pandemic began, online loans have become increasingly popular as they are more secure and easier to obtain than standard financing. With a few clicks of the mouse, buyers can complete their loan application and receive approval in hours. This is great for those who want to shop for mortgage loans online. They can do so without worrying about a lengthy application process or exorbitant interest rates.
Real estate agents now offer virtual viewings of properties to help prospective buyers understand what each space is like without stepping inside. In addition, thanks to 3D tours and video conferencing technologies, buyers can safely explore potential properties from the comfort of their homes.
Virtual Open Houses
Instead of in-person events, many agents now host virtual open houses or group viewings with limited attendance. This allows buyers to get a closer and personal look at the property while adhering to social distancing regulations.
Lower Home Prices
As more homes come onto the market, prices may level off. This could help make buying a home more accessible to those struggling with finances or overcoming credit challenges.
The real estate industry is facing unprecedented challenges even after the pandemic. Thankfully, some solutions can help buyers and sellers find their ideal properties while keeping everyone safe. With creative solutions and proactive measures, the industry can continue to thrive as it adjusts to the new normal.