This Pandemic has created some dramatic surprises in just about every aspect of our lives, including in the world of ‘Home Rehabbing.’ The pandemic impact to home rehabs are the following:
Inventory is the available properties on the market for buyers to purchase, otherwise known as supply. In some areas, normal sellers that had their property on the market with a realtor on the MLS, have dropped by as much as 44%. Why is that? Supply has dropped dramatically for several reasons:
A reduction in supply has a significant impact on house flipping because it means less competition. It makes it much easier to get full or even above the asking price. When you sell your newly renovated property on the open market, you’re competing with other available properties.
Having everyone at home under lockdown increased the demand for people to buy a single-family home. People want to have a home; they don’t want to be in a crowded apartment building or in a condo complex. Also, a major key is mortgage interest rates, during the pandemic they were the lowest in a very long time. Not only is there a huge demand for people to now have their own home, but it goes a step further.
That demand is going beyond just apartment dwellers, it’s also the people that live in urban areas. Now that our society is shifting to more people working from home, and companies get used to managing their teams remotely, it’s possible that there will be less of a requirement for someone to drive into the office. As a result, they might be able to commute from a home that’s further away from the city center. Right now, that shift is stronger than ever. People want a little more house and they want it to be a little further out in the country.
If we have increased demand for single family homes but a reduction in supply, what does that lead to? Rising values. There are other aspects of real estate, but when it comes to the fundamentals of what controls single family home real estate values, it’s about supply and demand. Many experts looking at this are surprised at the impact of the pandemic.
They’re seeing that even if supply increases dramatically, it won’t change the fact that values will continue to rise, even if they don’t rise as quickly. There’s just that much demand for affordable housing. Of course, it does depend on the area because every area is a little different.