COVID-19 has shaken people, industries, and countries to their core. While millions across the globe have been under self-isolation or quarantine for weeks, some industries have slowed down drastically, including the housing and real estate industry.
That’s led many renters, landlords, homeowners, and others to raise important questions about the future of the housing market—and whether the market will favor renting or buying in the wake of the coronavirus outbreak.
According to experts, following the COVID-19 pandemic, renting will probably be more popular than buying. Here’s why.
5 Reasons More People Will Likely Rent (Than Buy) After COVID-19
While several factors can influence people’s decision to rent versus buy a home, experts believe the rental market will bounce back faster than home sales largely due to these reasons.
1. Lost income & savings
With several businesses shut down during the coronavirus outbreak, many individuals and families have seen their income streams slow down or come to a screeching halt. For some, that has meant having to deplete savings to stay afloat. For others, it’s resulted in more debt.
Ultimately, for those who were considering buying a home before the COVID-19 outbreak, it likely means that:
- They may no longer be able to afford a down payment and cover the other costs that come with buying a home.
- They may no longer qualify to borrow due to a lack of recent earnings and/or higher debt-to-income ratios.
- They may not be in the position to buy a home in the immediate aftermath of the coronavirus pandemic.
2. Job loss & uncertainty
Another impact of COVID-19 comes in the form of jobs and job security. For many who were put out of work due to the coronavirus outbreak, it may take some time to find a new job. In some cases, relocating to find work may be necessary.
With all the uncertainty around job security and employment in the age of COVID-19—and given the fact that job security plays a major role in housing choices—real estate experts believe more people will be renting, not buying, homes for at least a few months after the coronavirus outbreak.
3. Low inventories
Although spring is usually prime time for houses to go on the market, the coronavirus has made some sellers more reluctant to put their homes up for sale. That’s likely because:
- Sellers may not be ready to let strangers in their homes.
- Sellers may not want to look for new housing or move until things feel more stable.
- There just aren’t as many buyers available, so sellers want to wait for more favorable market conditions (so they can get top dollar for their homes).
Additionally, the age of COVID-19 has been marked by a dramatic slowdown in the construction of new homes. That’s largely been due to disruptions in the building material supply chains coming from China.
Altogether, these factors all indicate small inventories, meaning simply fewer homes for sale and fewer options for buyers to choose from. That may cause some prospective buyers to continue renting until more options hit the market.
4. More issues with homes on the market
There’s no doubt that COVID-19 has turned many people’s financial situations inside out. Some of those people include homeowners.
In fact, homeowners who have financially struggled as a result of the coronavirus may have:
- Liens from debts attached to their properties
- Stripped their homes of major appliances or essential features, like refrigerators, when putting their homes up for sale
- Foregone major home maintenance needs, like roof or foundation repairs
All of that can end up meaning that some homes listed for sale don’t meet buyers’ needs or expectations. That’s why, experts say, prospective buyers are more likely to wait for better inventory, which, again, points to the likelihood of more renters than homebuyers following the COVID-19 pandemic.
5. Better rental prices & deals
With the coronavirus having slowed down the rental market, many apartment communities will be hungry for new tenants.
How will they compete to get new renters? Lower prices and better move-in specials!
That’s good news for renters, and it may be the push any hesitant buyers need to hold off on buying a home until there’s a greater sense of stability in the wake of COVID-19.
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