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Real Estate Big Data

March data shows prediction for home sales to decrease during summer

(REAL ESTATE BIG DATA) March of 2020 is the month that changed everything because of COVID-19. Experts say residential home sales could fall 30-40% and here’s why.

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Economists tell us that there is an ebb and flow to our economy. Any time there is a recession looming, the housing market takes a big hit. People aren’t moving to new jobs in new cities as much nor are they looking for their next home purchase if no additional income is coming in – so they stay put.

Many Americans have also lost their jobs, small business owners have lost their customers, and all of this takes away buying power and consumer spending. Some may have started 2019 or 2020 with dreams of upsizing or downsizing, moving to a different school district for their children, or making a move to a more desired climate.

One challenge in the current economy is that sellers do not want to lower their expectations on the price they should get for selling (which is sometimes an incentive for buyers) and buyers may have had to change their priorities or hold off on making a purchase – or be unsure that they can sell their current home when looking to buy a new one.

Experts suggest that this summer, which is the timeframe we typically see as being the hottest time for buying and selling homes, there could be a 30-40% drop in home sales due to the coronavirus. But there’s another issue at hand – inventory. It’s just not there.

The average amount of homes sold in the US in 2019 was 5.34 million according to data from statista. According to Yahoo! Money, “Last month’s inventory of 1.50 million homes for sale was the lowest March figure on records dating back to 1999, according to the NAR. That was also down 10.2% from a year ago.

March sales activity partially captured the effects of the efforts to contain the pandemic, which included social distancing and the shutdown of non-essential businesses in many parts of the country.

While housing sales edged up 0.8% from a year ago, the increase was boosted largely by sales of homes priced at $250,000 and higher. Homes priced at $100,000 or less saw a 18% drop in year-over-year sales, while homes between $100,000 and $250,000 fell 4%.

Trading Economics tells us that “Sales of new single-family homes in the United States plunged 15.4 percent from the previous month to a seasonally adjusted annual rate of 627 thousand in March of 2020, below a downwardly revised 741 thousand in February. It is the lowest reading since May of 2019 and the biggest drop since July of 2013… At March’s sales pace it would take 5.4 months to clear the supply of houses on the market.

We hope for the best and that everyone can just hold on for a little bit and that this is just part of the ebb and flow. Our economy has seen ups and downs, booms and recessions, so of course, we are all holding our breath a bit hoping to ride out this storm.

Erin Wike is a Career Coach & Lecturer at The University of Texas at Austin and owner of Cafe Con Resume. Erin is fueled by dark roast coffee with cream AND sugar, her loving husband, daughter, and two rescue dogs. She is the Co-Founder of Small Business Friends ATX to help fellow entrepreneurs + hosts events for people to live a Life of Yes with Mac & Cheese Productions.

Real Estate Big Data

The impact of COVID on moving and housing market

(BIG DATA) Why are Americans fleeing cities en masse, and where are they moving to? As COVID-19 continues, long term living for many has new goals.

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Suburb many Americans are moving to. Gold sunset with a dog in the middle of the street with houses on either side.

As a country, we have had to make some noticeable concessions during the last eight months. Those concessions have ranged from saying goodbye to our favorite restaurants and Friday night rituals all the way to waiving hospital visits for dying family members. Since one of those things is much sadder than the other, let’s take a look at why Americans are moving — and where they’re putting down their new roots.

COVID has almost unanimously made all of our favorite haunts—bars, restaurants, bowling alleys, actual alleys, and so on—inaccessible. Even in cities with fewer restrictions than recommended by the CDC, visiting such places carries certain risk.

So why on earth would someone elect to live near “prime real estate” when the main selling point of their current location is rendered moot?

This is a question many Americans are considering heavily in the wake of the pandemic. As the “necessities” upon which many of us have relied are now shown to be tenuous at best, the dilemma of where one wants to live rather than where one has to live has taken the forefront of consumer consciousness.

Indeed, Americans who previously sought out bustling metropolitan locations are now looking to quieter suburbs, smaller cities, and even more remote living spaces to counteract some of the invariable cabin fever brought on by this last year.

At first glance, this doesn’t make much sense. Surely there will eventually be a COVID-19 vaccine, and homeowners in cities nationwide will pack into their favorite locations en masse… right?

Unfortunately, between mass closures of crowd favorites in the aforementioned cities and the sheer frustration with which many have been living, moving makes substantially more sense. This, coupled with the fact that the real estate market is absolutely primed for new buyers, is the main reason Americans are fleeing the city in droves to exchange their rooftop patios for a backyard and some semblance of personal space.

The other thing to consider is this: The pandemic isn’t even close to over, and families need relief now. By moving to arguably safer, quieter locations, citizens will be able to hunker down and wait for the vaccine for a little while longer—and that’s good for all of us.

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Real Estate Big Data

Commercial real estate continues to flounder, decimated by COVID-19

(BIG DATA) As COVID-19’s economic effects ripple out, and remote work becomes a main stay, commercial real estate is struggling and help isn’t coming.

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Commercial real estate overhead with highway in between.

Bad news out of the commercial real estate sector is confirming what many economists predicted would happen as COVID-19 scoured across the globe.

In a report by the Financial Times, some US commercial real estate valuations have declined as much as 25% since the beginning of 2020. Architect billings have also shown little improvement over the past several months, which leads many to believe that the sector will see a decline in new construction in 2021. While a decline in commercial real estate values was certainly expected due to the coronavirus pandemic, the new data paints quite an ugly picture for the market.

Hotel occupancy has also dropped 32% year-over-year, with revenue per available room dropping 50% year-over-year. Despite tourism beginning to come back to life in several states, hotels are still struggling to fill rooms at levels anywhere near what they were pre-COVID. Several hotel CEOS have slammed Congress for inaction over coronavirus relief, questioning why something hasn’t been done to help the industry.

“They are just so stuck in their positions. I feel so aggravated by it. Why can’t we work something out?” Best Western CEO David Kong said, “If we don’t get a vaccine soon and business doesn’t return, it’s going to get much worse.”

Hotels are some of the hardest-hit businesses in the commercial real estate sector decline, along with malls and come office properties. Commercial mortgage-backed securities (CMBS) investors are also feeling the pain, although there may be an end in sight for those trading in such financial instruments. Unlike the housing bubble of 2008, even if the CMBS market were to crash it is far smaller than the residential mortgage-backed securities market, meaning it wouldn’t cause a full-scale financial crisis.

With several major companies acquiescing that remote work is here to stay, some office properties are facing a doomsday scenario. Despite how bad the data is now many predict that the worst is yet to come, leading to a decimation of the sector as a whole. As coronavirus cases continue to rise across the United States, even companies that wish to return to the office will probably need to wait until after the expected “second wave” of the virus passes. So while it might be tempting to pick up CMB securities for your financial portfolio at all-time lows, you may want to wait—things aren’t looking up for commercial real estate.

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Real Estate Big Data

Are you selling real estate in a high-cancer-risk area?

(BIG DATA) If you own a brokerage knowing your local ecosystem can be beneficial. Whether it’s a humble brag on your blog, or a letter to a local rep, knowing your environment is always a good idea.

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Check your housing environment for cancer risk and support your area.

As a realtor or brokerage owner, you know the importance of understanding your community’s ecosystem in order to shape your business strategy.

However, have you considered how environmental and quality may play a role in those decisions?

This study published in Cancer suggests that you should. According to the study, “of every 100,000 Americans, 451 of us will get cancer in a given year.” The study “found a difference of 39 cases (per 100,000) people, between areas with the highest and the lowest environmental quality.

This establishes a significant link between environmental qualities and cancer risks.

The study also showcases a map of the US and the air quality of various regions. Red and orange areas have the worst air quality, while blue and green areas have the best air quality. As you might expect, large metropolitan areas have the worst air quality, and things improve as you move into more rural areas. You do find the most exceptions throughout the southeastern region and a vertical stretch that runs from the tip of Texas to the Dakotas up north.

These kinds of signs can either be a major benefit or a major obstacle to attracting buyers to your real estate market.

According to the most recent Gallup polls, 47 percent of Americans worry a great deal about the quality of the environment. So, how do you adjust?

If you’re in a blue or green area, make sure to get the word out! People now consider environmental quality as part of the quality of life factor. Don’t let that benefit go unnoticed. Blog about it on your own website. Use your social media to share data like this from other sources, or other information praising the environmental quality and protections of your market.

Integrate it into your marketing materials where possible.

If you’re in a red or orange area, you’ve got a bit more work to do here, and it’s going to get a bit political. There is already plenty of concern about attempts at the federal level to handicap agencies dedicated to protecting the environment. Be wary of such measures at the state and city level, and be a voice for the real estate economy in shaping this policy.

Does going to places of legislative businesses give you the heebie-jeebies? Find local organizations dedicated to improving environmental quality. Sponsor a river or park clean up event. Show your support for events like Earth Day. Don’t have those kinds of events? Harness your entrepreneurial spirit and bring these events to your community. Taking action as a community leader will be massively beneficial for your brand.

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