COVID-19 has impacted every aspect of people’s lives. The global pandemic has sent employees and students to work and attend school from home. Groups of friends or family have Zoom happy hours and birthday parties. Grocery store employees and delivery drivers have been deemed essential workers. It’s been challenging to find disinfectant and toilet paper. So it’s no surprise that COVID-19 has affected the real estate market as well. However, it’s not all negative! There are a lot of positives that have come out of COVID-19 for those looking to invest in real estate right now.
The global pandemic is affecting both residential and commercial real estate throughout California. Despite the changes the world is seeing, real estate transactions continue to occur across the state. Now is a great time to buy a new home or consider a new commercial real estate investment. Here’s how COVID-19 is affecting California’s housing market and commercial real estate.
What COVID-19 Means for California’s Housing Market
Early into the pandemic, realtors had to cancel open houses and develop new ways to get the job done in a world of masks and physical distancing. Virtual tours and showings temporarily replaced open houses. In April, home sales dropped, but as people realized the pandemic wasn’t going away and adjusted to the new normal, the housing market started to rebound.
Here’s where we’re at now:
- Home sales are up across the state: Many people are moving out of cities or realizing they want some more space as everyone works and studies from home. More people are buying homes at this time this year than they were last year.
- Supply is down: Fewer people are putting their homes on the market, which means there are fewer existing homes for sale right now. Some people who may have been considering selling their homes have put those plans on hold for right now.
- Prices are up: The median home price across the state is up more than 10% (up 18.7% in the San Francisco Bay area).
- Mortgage rates remain low: The 30-year fixed-mortgage interest rate is averaged at 2.94%, which is down from last year’s average.
For people looking to move out of the city, out of an apartment, or just into a bigger or new space overall, now is a great time to buy. Even with less inventory, home sales are up and mortgage rates are down, which means buyers can get a great deal on a new home and find a space that works for the new normal families are living with.
COVID-19 and Commercial Real Estate
When it comes to commercial real estate, it’s important to find the right space for your building. While the future of work has shifted slightly, it’s still important to have a home base of sorts for companies. Many of us may be working from home right now, but as companies develop new models, strategies, and procedures to conduct business, the return to an office space is imminent. That makes now a good time to look for a new commercial real estate space to invest in.
Here’s a few reasons why:
- Better prices: Now is a good opportunity to buy commercial properties at better prices. Many companies are downsizing their space as work-from-home continues and some consider making the change more permanent with employees splitting time between home and office in the future. Those office buildings may be for sale, and now can be a great time to get a good deal.
- New office spaces near where employees live: People have adapted to working from home, and if your employees moved or already live in the suburbs or other areas away from past office spaces in cities, it might be the right time to buy smaller local offices closer to where they live. It can be a great investment for you, as well as showing your employees you care about their happiness and their commute.
- Office sharing is the future: In the past, smaller companies sometimes shared office spaces with other small companies. Now, more companies are looking toward office sharing. As companies consider splitting time between work and home, or rotating employees through the office on different days, considering how an investment in commercial real estate can set up office sharing for the future return to the office could grow your business.
Because people will be returning to the office—sooner rather than later in many cases—a new location closer to employees in suburban areas or in a shared office setup, now is a great time to get a deal on a new CRE investment.
First Bridge Lending is local to California and can help you understand the current trends and the real estate situation surrounding COVID-19. For more information on First Bridge and our lending practices, please contact us directly by calling 415-248-1167. We can discuss your next residential or commercial real estate investment and ensure you find the right place for your family or business to grow.