COVID-19 Health Crisis Delivers Surprisingly Good News to Housing Industry
The ongoing COVID-19 crisis has upended the entire economic landscape of the world. While it is not a shock that so many businesses have suffered great losses at the hands of the pandemic, it is certainly surprising that the housing industry has continued to weather the storm in most locations throughout the US. Here is the latest on the housing market in general.
The Good News
The good news for the housing industry is that most markets have continued to thrive throughout this challenging economic time. Recent numbers show that both new and existing home sales are hovering at levels that have not been seen since the Great Recession. Experts point to the record low interest rates as the primary reason that the market has continued to see significant growth despite the staggering levels of unemployment.
Hottest Housing Markets
There are some surprises related to what markets are seeing the most growth over the last six months. There has been a shift to the more suburban areas as companies make the move to allow for more employees to work from home. What was once thought to be a temporary reaction to the onset of COVID-19 is now being seen as a permanent change for many companies. As employers realized that workers could be just as productive while working from home, more businesses have downsized their physical office locations.
This has had the effect of families moving out of high-density urban areas and into more suburban locations. The hottest housing markets over the last few months have been Fresno, California; Rochester, New York; Columbus, Ohio; Colorado Springs, Colorado; Bakersfield, California; Portland, Maine; Worcester, Massachusetts; Stockton-Lodi, California; Harrisburg-Carlisle, Pennysylvania; and Allentown-Bethlehem, Pennsylvania.
Just prior to the COVID-19 crisis hitting the US, San Francisco was the hottest market. However, as the city shut down and employees were asked to work from home, more families decided to make the move toward less expensive and less dense areas of the state. This is just another way in which the pandemic has touched nearly every aspect of life.
Surging Real Estate Stocks
It is not just the sales of homes that have spurred this market forward. Surging stocks in the real estate industry are another indication that the market for homeownership is thriving. Homebuilders have seen a significant boost in their earnings as homebuyers look to purchase new construction.
Now that it is clear that COVID-19 is going to be with us for the long haul, many families are upgrading their homes so that they can enjoy more space and bigger yards. One of the highest-performing stocks of the year is D.R. Horton. The popular home builder boasts the highest volume of new sales in the country. Its stock is up over 45% in 2020 as people race to build homes suited to their exact preferences.
Other stocks that have enjoyed great prosperity as a result of the crisis include businesses that provide value to homebuyers during this time. For example, some home builders are responding to the telecommuting demand by offering new houses with video conferencing services built in. It is easier to adjust to a changing marketplace by adding these features into new home construction rather than modifying existing homes to fulfill the need.
The Bad News
Not all of the news has been good over the last six months. As certain markets enjoy unprecedented growth, other areas are reeling. As technology leaders such as Twitter, Facebook, and Google ordered employees to work from home indefinitely, the San Francisco and Oakland housing market went into a tailspin, falling to number 45 in the country from its top perch. Located within Silicon Valley, the San Jose-Sunnyvale-Santa Clara area dropped from number three all the way down to 62.
A significant drop in oil prices is being blamed for the Dallas housing market dropping from 19 to 41. Other markets that are struggling during this time include Miami-Fort Lauderdale-West Palm Beach, Florida; Baton Rouge, Louisiana; Honolulu, Hawaii; McAllen-Edinburg-Mission, Texas; Cape Coral-Fort Myers, Florida; and New York City, New York.
Nobody can predict what will happen with the housing market moving forward this year. The one thing that is certain is that COVID-19 will continue to influence the housing landscape well into the next year and beyond.
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