No question this pandemic has changed many aspects of our normal lives. People wear masks. We keep our distances from strangers. We are even hesitant to hug and shake hands with friends and family. And boy we sure wash our hands a lot.
But since this is a real estate column, the big question for me is how is this going to change how and where we live? Since we are in uncharted territory and this is a new phenomenon, it may be too early to make long-term forecasts. But there are some preliminary trends appearing that may give some insight to what the future may be for real estate.
First, some people are becoming nervous about living and working in cities where people are living on top of each other in high-rise buildings and commuting on public transportation like buses and subways. Additionally, several cities are seeing continual riots and protests making them less safe for the general public. Both these situations are causing people to consider moving to more rural communities that are safer and less susceptible to viruses.
Many companies are trying to keep their employees safe by allowing them to work from home. Google, for example, just announced that it will allow many of its people to work from home until next summer. Obviously, this isn’t possible for all businesses, but does work well for many service and high-tech jobs.
Schools and colleges are
offering a combination of online and in-class teaching for safety. That means you get to have more quality time with your kids as you are being part-time unpaid teachers. So, if you were planning on converting your college-bound kids’ room to some other use, you may have to wait a while longer.
I asked Ron Gable, broker at Compass Real Estate for Half Moon Bay and Menlo Park, if he was noticing any new trends in his offices. He said with many companies allowing more people to work at home, he is seeing an increase in demand for larger homes that can accommodate home offices and extra rooms for home schooling.
Also, since people are spending more time at home, they want bigger yards. What Ron isn’t seeing yet is an exodus from San Francisco to the suburbs as is happening in larger cities like New York and Chicago. Perhaps that’s because the levels of COVID-19 cases is less and there is less unrest in comparison to other places.
We both are seeing a big uptick in demand in some of our offices in resort areas like Lake Tahoe, Coeur d’Alene, etc. for people who can telecommute, retire or want to be away from crowded places. In many of these areas, the demand is very strong and prices are going up rapidly.
I do see demand falling for office space, especially in cities as more people work from home. Some companies may be able to downsize their office size as more of their employees work from home and lower their rents. I can also see rent prices falling as demand declines. Shopping malls should see more vacancies too with closed restaurants and movie theaters and people buy more stuff online. A potential saving grace for some malls are companies like Amazon that are taking over space abandoned by big retailers like Sears as they expand their distribution centers. Luckily, we don’t have much of those types of real estate here.
It is possible that the coast may see an uptick in demand as our home prices are amongst the least expensive in the county. Of course, I’ve been saying that for years and its never materialized. While home prices are up significantly this year, the number of home sales are down. This decline in volume has been ongoing for many years and I don’t see anything that is going to really change that trend. I’m guessing part of the decline in volume is directly related to the rise in home prices and stricter lending requirements. Considering the strict limits on growth here and the lengthy process to build a subdivision, there’s never going to be a big surge in sales. That should keep home prices up for those lucky enough to call the coast their home.
Steven Hyman is the broker and owner of Century 21 Sunset Properties. He can be reached at 726-6346 century21sunset.com.