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The COVID-19 outbreak has devastated small and big industries that make up the great American economy. The Coronavirus brought important sectors like airlines to cease operations and contributed to the loss of jobs of more than 10 million Americans within a span of a few weeks. The real estate market is at high risk from several different angles, and the extent of the effects will depend upon the duration of the country’s economic shutdown.
According to real estate experts, it will still be a few months from now until we can determine how much the real estate market in Florida will suffer from the effects of the global pandemic that is COVID-19. We can, however, look at predictions based on analyses conducted by real estate experts in Florida.
Florida is highly vulnerable to the effects of COVID-19
It has been concluded that Florida and other East Coast states will have the most counties that will suffer from the coronavirus crisis. There will be various aspects of the real estate industry that will be hit hard and fast by the economic standstill caused by COVID-19.
Florida’s real estate sectors, including hotels, restaurants, bars, clubs, and other commercial entertainment venues will be affected by the slowing down of the economy. Retail and housing, specifically second-home and luxury homes, will suffer from slow growth, which at times may seem like no movement at all.
In terms of real estate, developments will be acutely interrupted as the lockdown in Florida ultimately forced workers to stay home. The shutdown of businesses from local family-owned restaurants to companies offering lead generation for contractors, quarantines, and curfews across the state will result in a significant reduction in consumer spending. All these factors further push the economy into recession.
It also remains unclear how the economic struggles caused by COVID-19 will impact the state of Florida’s congregate senior housing industry. However, real estate market experts announced that the tourism industry in Florida would be in great turmoil due to the direct impact of contagion concerns and indirect influence from significant declines in stock values and reduced income. Florida locals will experience feelings of being less wealthy, which can delay all their travel plans as well as plans of purchasing real estate properties in Florida.
Florida Housing and Homebuilding in the Time of COVID-19
New home sales in Florida are expected to experience sharp drops in April and May. Even before the state of Florida went into lockdown, sales of new homes started dropping in February. There were more sharp drops in March, and economists are encouraging homeowners that this is the right time to sell.
There is no steep decline in business dealings in the Florida real estate market. Unlike the predictable great economic recession that happened almost 13 years ago, the real estate market amid the coronavirus outbreak is unpredictable. It is hard to forecast whether the real estate industry will crash as a result of the acute economic recession.
The new luxury homes and condos market has been slowing down even before lockdown. The middle of the real estate market in Florida, however, will be stronger because only a few new homes in the mid-price range have been built in recent years. Many real estate experts and economists are scared of the unpredictability of the current marketplace. It is harder for experts to predict what is going to happen to the real estate market in Florida and other states, too.
Rental Apartment Industry
The long-term outlook for real estate rental properties remains bright. Lease renewal rates in most properties in Florida were stable before the COVID-19 outbreak. The number of apartment and condominium constructions in Florida were also strong before the crisis. Still, these two real estate sectors will experience a slowdown in the next coming months, as younger tenants will find the need to move back in with their parents for a short period due to the current layoffs across the country.
Apartment and condominium property owners will be dealing with many tenants who have lost their income and are unable to make their payment in the near term. The majority of these tenants will ask for forbearance starting this month, and even more, will be seeking payment extensions in May.
What lies ahead for the real estate market in Florida?
The coronavirus outbreak created a significant disruption in the demand and supply chain in the real estate market. But once the virus is successfully contained, vaccines mass-produced, and immunity starts taking hold in the population, the real estate market will begin humming once more. Real estate investors will find a silver lining once the COVID-19 crisis is over. Similar to what happened during the economic recession 13 years ago, specific measures will be enforced to help real estate buyers and sellers towards quick financial recovery.