The coronavirus pandemic has a lot of people wondering what will happen next. We can only use our previous economic experiences to understand what this situation would mean for property owners and real estate investors. Here’s what real estate investors in Norfolk should expect during the coronavirus pandemic.
Shift in Demand
The real estate market is expected to start having fewer buyers and more homes for sale. This means that buyers will have the upper hand during real estate negotiations. There will be less demand for homes, so the sellers will have to be willing to sell at what the buyers are willing to pay.
Homeowners may be losing income and might not be able to afford their mortgage payment. There may be a surge in distressed properties, which means real estate investors can pick up properties for less than market value. They will have more negotiating room when it comes to traditional real estate purchases. Housing prices in general will not be increasing, and there will be a lack of demand for new construction homes since pre-existing homes will be readily available.
This is expected to be a great opportunity for real estate investors because of the increase in distressed home sales. The coronavirus pandemic has put an incredible amount of people out of work and incredibly uncomfortable financial situations. Selling their house might be the only way out. This means they probably won’t haggle much on the price if they aren’t getting many offers. These sellers, however, may be a little more emotional than usual, so do take that into consideration while in negotiations.
Real estate investors that own short term rentals or vacation property rentals should expect to have extremely low occupancy rates while the coronavirus pandemic is going on. Most people will not be vacationing or visiting relatives while safer at home orders are in effect across the nation. In addition to the homeowners, vacationers may have lost the income needed to go on these trips. You may need to lower your rates temporarily to attract short term renters. Even if you don’t charge full rent, you will be able to cover at least some of your expenses.
Eviction and Foreclosure Suspensions
Real estate investors in Norfolk should expect to suspend any pending evictions and foreclosure measures on any tenants during the coronavirus pandemic. Essential-only work orders and safer at home orders have caused an unprecedented amount of unemployed workers, which means they may barely be able to afford food and may not be able to afford the roof over their heads. Under normal circumstances, these people would most likely be evicted, but during the coronavirus pandemic, the eviction must be suspended to give them time to come up with the unpaid rent. Any property owners with mortgages that have also experienced unemployment may also not be able to pay rent on time and under normal circumstances would have foreclosure proceedings drawn against them, but during the coronavirus pandemic, these proceedings must be postponed.
Tighter Mortgage Lending
With the drop of the mortgage rate on loans, there is a gigantic surge in applications for mortgages on real estate. With this large influx, the mortgage originators must start to have tighter restrictions in order to refrain from over-lending. Lenders might require a higher credit score or a larger down payment.