Too many people across the world live month-to-month. As COVID-19 has backhanded the planet, many of those people are either economic casualties, or they have truly died. In the third world, it’s estimated that twice the normal amount of people will die of malnutrition or other economically-related hardship owing to the lockdown in 2020.
That’s about 18,000,000 people dying from economic issues in 2020 alone. Thankfully, many in America, poor or not, aren’t in a situation where this year’s economic fallout will kill them. However, since they’re living month-to-month, the lockdown has destroyed their livelihoods. Many are delaying paying rent for months, or resting on legal protections.
As a result, landlords are increasingly desperate. Some have received government support, and the wise ones understand the fallout from this year will reverberate through financial sectors for a long time to come—maybe even decades. That means they have to evict people, liquidate their assets, and find more profitable areas to operate.Accordingly, real estate in big cities is dropping like a stone. In NYC, governor Cuomo has extended eviction restrictions to January 2021. You can bet landlords are taking that to heart as they lose tens of thousands of dollars a month. With these things in mind, here we’ll explore the impact of COVID-19 on real estate nationwide—be advised: it’s substantial.
Homes Being Purchased “Site Unseen”
NYC has lost hundreds of thousands of people. Some reports had as many as 420,000 leaving the city as of May 2020. If those trends have continued, that means as many as a million have left the Big Apple by the time you read this. Where are they going? Philadelphia, Boston, and Atlanta are prime migration locations; as are Rhode Island and Florida.
New Yorkers are also heading to America’s heartland. The same thing is happening in California; though notably, their exodus has merely picked up steam—it was going strong already, now it’s going stronger than ever. In large part owing to real estate issues, to begin with, Californians are heading to Phoenix, Las Vegas, and Austin. Conservative Californians are headed to Nashville.
There’s a lot of Californians flooding Colorado as well, but that state isn’t being focused on because, owing to their adoption of similar social and economic policies, the state will likely hit an implosion threshold soon as well; savvy migrating Californians are aware. That said, Colorado’s real estate market is as strong as ever-present, so that’s a data point to keep in mind.The net result of millions traveling from big cities to the country nationwide is that properties are being purchased in full without even being toured by the buyers. Think critically: a house worth $100k in Ohio goes for $1,000,000 in places like L.A. or N.Y.C. Accordingly, when the acquisition price is less than the traditional downpayment anyway, the choice is easy.
Traditionally Expensive Real Estate Markets Drastically Changing
Though winter is coming, and normally this is a time when property values are low, central areas of the country are seeing a bit of a boom. Meanwhile, the big cities have historically low property rates, and if you’re a venture capitalist, you can snap them up at bottom-dollar rates.
Right now is an extraordinary time, because the reverberations from COVID-19 will continue affecting the real estate market for a few years after the election. However, it swings. So if you have some capital, now may be a good time to invest; but you’re “betting” on the economy returning to these big cities.
Many economic analysts are prognosticating the fate of Detroit for cities like Los Angeles, San Francisco, and New York City. That said, the Los Angeles metropolitan area is a bit more variable owing to its diversity of real estate arenas. South, Central, East, and West L.A. proper are likely to sink; but Orange County may remain buoyant, as may much of San Diego.
One place that’s doing a lot better right now is Texas. Austin, Houston, and Dallas are “sitting pretty”, as the locals might say. Just to get an idea, check out these downtown Dallas lofts. Not only is the price more reasonable, but they’re also more reliable over the long term. So though you can get a good property cheap, you can also likely see a profit on that property’s value in time.
Nashville and Austin
There is a slightly diametric split in how people are leaving states like N.Y.C. and L.A. You can just look at Joe Rogan and Ben Shapiro to get an idea. Joe has moved to Austin, Texas, while Ben is making pretty loud noises about Nashville, Tennessee. You can expect subsequent migrations on either political extreme to center on these landing spots.
Nashville has been in a good place for real estate for years now, and though as all cities it has seen a dip owing to COVID-19, there’s a high likelihood the city will flourish in due time. Will Austin likewise see a spike once the crisis ends? It’s possible; right now it’s anybody’s bet which city ends up doing better. Owing to a gig and remote-work economies, many homebuyers can simply move where they want to.
One thing is sure: if you’ve got $100k to invest in a real estate property somewhere, you could pick up two or three in the right community, install renters, and make a very tidy living for yourself in a few years. So calibrate your purchasing decisions accordingly.
Understand that big cities are deflating and the smaller cities are inflating—this affects real estate. Also, understand that the reverberations from the crises of 2020 will likely bounce around the real estate market for a few years to a decade.