What Happens to Location Location Location During Covid?
Goal: Discuss the upcoming real estate bubble situation
As everyone knows the mantra for real estate is location, location, location. Based on the location, the property value rises or falls.
But we are living during interesting times…
Recently, there are interesting phenomenon that are converging and I believe will completely change the real estate market. Let us discuss a few of these.
Starting mid year the federal government has allowed homeowners that were hurt by a layoff to postpone their payments for three months. After three months for most people without work, it was extended for another 3 months. That places us at the end of the year when most of these mortgages will need to start repayment. Without a stimulus agreement repayment of mortgages will automatically restart.
Whether one has a job or not…
Second phenomenon is the work from home. A lot of people over the years have lived inside the cities in order to be close to work and partake in the culture, and activities that most big cities offer.
But if you are forced to work from home and socially distance for years what is the value of living in a city?
I explored moving back to Chicago for work and was told that the real estate was becoming cheaper because people were moving out to suburbs or farther. I do believe that cities are not going away and that eventually people are going to want the cultural events and activities even if they don’t live there.
So what does this all mean?
I believe that quite a few people will default on their mortgages during the first half of 2021. This will place a ton of properties up for sale and further increase the Covid recession we are going through. I would not be surprised to see a 25–50% adjustment in the asking price.
A few weeks ago I was talking with my neighbor and she told me that their daughter who is an executive with a Big 5 accounting firm has moved her family from New York to Boca Raton Florida to test the waters. This is not only going to save money on the rent in Manhattan but provide more space and tax free living in Florida.
If people can work from home some might even choose to live a nomad lifestyle and literally live anywhere in the world. Would you chose to live in a 400 square foot apartment in New York vs. 4000 square foot house in Florida vs. Airbnb apartment for a month in Barcelona? The options are endless.
Work from anywhere instead of work from home?
Just like the web has made opportunities spread across the world, the working from home will spread employment and lifestyle freedom across the world. I would not be surprised that many countries start to offer nomad visas to attract money into their countries.
There will be opportunities in owning real estate. As I said earlier, the cultural events and activities of a big city will still create a pull towards those.
Last thing to remember is that the roaring twenties came after the 1918 Spanish Flue pandemic. People are going to go nuts once the restrictions are lifted and they can freely enjoy life as they lived it before.
My two cents….(this is what I earned from Medium.com in October 2020)
I got to go…my future self alarm went off
Robert Trajkovski is professional with experience in leading people and projects in Steel/ Power, Refining, Chemicals, Industrial Gasses, Software, Consulting and Academia. He has worked for both owners and engineering companies. In addition, he has instructed 73+ courses at several institutions and often offers his courses for free on LinkedIn.
https://www.linkedin.com/in/roberttrajkovski/
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