There has been a surge in buyer interest in rural areas and small towns according to new data from Redfin. As a direct result of COVID-19, less-populated areas jumped in search volume on the platform:
Source: Redfin
Tim Ellis of Redfin provides the following insightful summary based on the above data: “Based on what we’re seeing in the data so far, it looks like the housing market in rural areas and small towns will weather the storm through coronavirus shutdowns better than the big cities. We may also see an increase in home sales in these less densely populated areas in the long term as well, as homebuyers look to get away from the cities or just purchase a second home that they can retreat to when times in the city get rough.”
Rental demand has understandably dropped, most significantly in major cities. Julia Falcon of Housing Wire notes that “Google search volumes for apartments for rent were down between 10% and 35% last week in its top cities, while long-term inventory dropped by about 12% last week.”
Bethany Biron of Business Insider reports on this trend, highlighting that interest in remote and rural areas has skyrocketed, according to AirDNA data. “Anxious Americans eager to avoid the spread of the coronavirus are heading to short-term rentals in remote parts of the country.” At the top of the popularity list is Pacific Beach, WA, where interest in short-term rentals in that area is up 378.7%.
Carey Biron of Reuters reports on the rise of interest in remote and rural real estate, noting that in early March, internet searches of rural properties increased 364% from the same time in 2019.
Multifamily update
Bendix Anderson of National Real Estate Investor reports on how multifamily rents have already dropped, something that is unprecedented during this season. “The rental cost of an average apartment in the U.S. on March 26, 2020, was down 0.23 percent compared to the week before.”
Julia Falcon of Housing Wire reports on the impact of the CARES Act on multifamily, reporting that “The package says that multifamily owners that were on time on their mortgage payments as of February 1, but are now facing financial hardships due to the COVID-19 crisis, can seek temporary forbearance by submitting requests to their lenders.”
Lenders are slowly releasing guidance specific to multifamily loans according to Georgia Kromrei of The Real Deal. The New York Community Bank—one of NYC’s largest multifamily lenders—is offering borrowers affected by COVID-19 “six months interest only and escrow payments or deferral of principal and interest for six months, payable at maturity.”
Matthew Haag of The New York Times reports on an NYC landlord who canceled rent for all his tenants in over 80 apartment buildings across the city. “His only interest, he said, was in alleviating stress for his renters, even those who were still employed and now working from home.”
Multifamily construction is dramatically affected by the ongoing crisis. According to Christine Serlin of Affordable Housing Finance, a National Multifamily Housing Council (NMHC) survey shows that 55% of respondents have reported construction delays. “Of those experiencing construction delays, 76% of construction firms also reported that they are facing delays in permitting, and 59% said they are seeing delays in starts…62% of respondents said they are experiencing construction delays related to a local or state moratorium.”
Finally some resources. Jones Day provides some interesting guidance for multifamily investors with a number of FAQs related to the CARES Act and commercial lending. The Federal Housing Administration released some insightful Q&A for multifamily investors. For those with commercial real estate and loans, the National Association of Realtors (NAR) released their guide titled Coronavirus Guidance: Commercial Real Estate.
COVID-19 resources for investors
Stay on top of how the current crisis is affecting real estate with Stessa’s daily news updates. Also, be sure to check our COVID-19 guide that gives rental property owners resources and tips for managing the pandemic.
Following their devastating pandemic, China is getting back to normal. Liz Lucking of Mansion Global reports on Frank Knight data showing a rise in real estate transactions in China. “The recent uptick in property transactions suggests this filtered through into buyer sentiment with a degree of pent-up demand being released.”
Source: Mansion Global
Amidst our current uncertainty, Nerd Wallet predicts where interest rates will head in April. “The Fed clearly intends to steady mortgage rates. If it succeeds, the 30-year mortgage could settle at around 3.5% or lower through April, giving more homeowners an opportunity to refinance.” Looking at your mortgage options? Be sure to get a rate quote through our partner lenders.
Jack Stone of D Magazine provides some timely and uplifting advice for investors who may be feeling the stress of the ongoing crisis: “People will always need a place to live, and there are few better places to invest in than multifamily housing, especially in markets like ours. So wash your hands, and let’s get through this together.”
Airbnb announced yesterday that Silver Lake and Sixth Street Partners will invest $1 billion in a “combination of debt and equity securities” as the home-sharing platform struggles with the ongoing crisis. CityLab’s Feargus O’Sullivan published an article titled Can Airbnb Survive Coronavirus, asking very tough questions on the longevity of Airbnb’s business model. The Guardian also produced two well-written pieces on the future of Airbnb and the new reality for STRs as we rebuild ourselves following the pandemic.
