How’s The Market?
Throughout my career as a real estate broker, I am often asked the question “How’s the market?”. What has been different this year is, it is usually followed up with “How has Covid affected things? Since I practice in both the Richmond commercial and residential markets, I have to answer that it’s a mixed bag, depending on which market you mean and what sectors of the market!
On the residential side, the market has “kept on trucking” driven by a combination of low inventory and historically low-interest rates (averaging this past week at 2.88% for a 30 year, fixed-rate mortgage, and has been below 3% for 10 straight weeks). Interest rates are expected to stay low at least through the first quarter of 2021 if not longer. This has driven prices up (with the median sales price up over 10% statewide compared to last year) and in many cases, multiple offer transactions. If you aren’t in the market to buy or sell, with these low rates, you should consider exploring whether refinancing your current home makes sense for your situation if you haven’t already. How did Covid impact the market? Well, initially it slowed down in-person showings down to a low point in early April, however, the industry adjusted quickly with virtual showings as well as adopting Covid related protocols such as requiring masks, time between showings for adequate social distancing, hand sanitizer on hand, etc. Showings climbed back up to last year’s numbers by the start of July and haven’t slowed since.
Covid has had a much different impact on the commercial real estate markets. Retail and hospitality sectors, as one can imagine, have been hit the hardest by the pandemic. These sectors are prime for investors looking to purchase distressed properties. On the other hand, the industrial and multifamily markets have weathered the storm well. The jury is still out on how it will ultimately affect the office market as tenants re-evaluate their office space needs. While pricing and lease rates have held steady locally, leasing activity is way down and there are more sublease opportunities becoming available. We will have to see how companies decide how they will operate moving forward and how that affects the market…will they downsize while some employees work virtually as the new norm? In addition, investment activity has slowed with many deals put on hold or terminated due to the pandemic as it is still hard for investors to underwrite a multi-tenant building purchase with an uncertain future.
If you have any specific real estate questions, contact Patrick Sanderson today!