Real Estate Trends and the Economy During COVID-19 – Pittsboro NC & Beyond

In this video Eric Andrews discusses the economic impact, potential recovery and real estate trends we may experience in 2020 thanks to Covid-19. Rentals and properties with acreage are in extremely high demand in Pittsboro NC. Eric also discusses how people are moving out of urban areas to places like Chatham County.

Speaker 1:           All right. You were on a recent Zoom call. Tell us about that.

Speaker 2:           It was an economic summit for the Realtors Land Institute, and it was very interesting. They had some national economists from University of Chicago, Stanford, and San Diego, and they were talking about what’s going to happen to real estate and the economy as a whole, because due to this COVID-19 and some of the shutdowns that we’re having. So they said there’s different kinds of recovery types. There’s a V, a U, and a check mark or a hockey stick. And they said… A lot of people are hoping for a V recovery where we went down sharply, hit bottom, and we’re going to come back up sharply. They don’t expect that to happen. Then there’s the U, where it goes down sharply and we’re down for a very, very long time, and then it goes up sh sharply. They don’t expect that to happen either.

They said, this is a hockey stick where it went down very sharply and we’re going to gradually get out of it over time. So I think as far as pricing is concerned, we have some seller resistency where a person knows that their neighbor across the street sold their house a couple of months ago for X amount, and so that’s what they think their house is worth. It’s probably not worth that right now. It’s probably gone down. There’s 30 million people out of work, but we don’t know how much the prices have fallen. I think we’ll have more of an indication come around August, September, October of what the pricing is. But right now it’s kind of all up in the air.

Speaker 1:           We’ve seen a couple houses recently with two or three acres, just sell instantly.

Speaker 2:           Yeah. So that’s what they’re saying. What are the trends in real estate right now? And the trends are, people are moving out of urban areas. People are moving out of regional areas. So we have the Northeast and the West Coast, people are moving out of those areas. Southeast, Mid Atlantic is doing very, very well. People are moving to those areas. But then within those areas, we have people moving out of the urban areas into rural areas. So yeah, homes for two or three acres, not in your traditional cookie cutter neighborhood are red, red, red hot right now.

The rental market is going to continue to be… It’s already been hot. And if it’s at all possible, it’s even going to get hotter. The investors that have cash, that can buy and flip and rehabilitate lower end houses and fix them up so they can be rented, could do very, very well right now. Rents are extraordinarily strong. People are talking about people not paying rent. We’re seeing very little of that right now. People are doing a good job of paying their rent. And we expect the rental market to be very strong for two, three, maybe even five years.

And then people are also asking what will happen to land prices. Well, most land owners don’t have a loan on the land. So unlike a house with a mortgage or commercial properties that might have some kind of financing loan on them, most people that have big tracks of raw land, own them outright. They’re used to downturns in the economy. So because they don’t have any holding costs, they’re like, “I’ll just wait 5, 10 years for this to bounce back and sell it then.” But also because they own an outright, they might need cash. And so they can have a 4 or $500,000 piece of land, but if the right person comes along, they might sell it for 250, 300,000. So we’re probably going to see some adjustments in land prices right now.

I know that the big companies, acquisitions are on hold. The really, really big builders and developers aren’t going out and buying land right now for obvious reasons. They’ve also cited a lot of delays in development. If they’re close to the finish line, they’ll probably go ahead and get them improved. But if they have to put a lot more money in them to get them approved, they’re probably going to back off right now. So a lot going on, I think we’ll know more in the months to come, but it’s an interesting time.

 

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