Coronavirus Impacts on the Real Estate Sector: Why You Need to Think Short and Long Term
The real estate industry is being hit by the coronavirus, and it will get worse before it gets better. The effects in the real estate sector will vary according to the sector and the market, and the extent of the effects will depend on the duration of the economic closure.
The real estate sectors that have been hit hardest so far are hotels, restaurants, bars, and other entertainment stores (particularly in tourist-run areas), closely followed by retail and housing (particularly second and luxury).
The supplies that builders and developers need are increasingly disrupted as workers stay in their homes, and due to business closings, quarantines, and curfews. A large number of layoffs will lead to a further contraction in consumer spending, beginning a downward spiral in economic activity. Together, these forces are already pushing the economy into recession.
China’s factories and companies are now rebooting, which could be cause for optimism regarding a fairly rapid return to normal economic activity and strong property markets. That said, China took swift action that the United States is only taking slowly and reluctantly now. There are many moving parts, so let’s dig deeper.