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How the real estate market is evolving and future scenarios

by Thomas
How the real estate market is evolving and future scenarios

It is a question that many have asked me in these 2 months, today I want to give an overview of how the real estate market is evolving and future scenarios.

Sources such as Reuters say there will be an increase in house prices between now and next year, with an upward forecast in the United States of between 3% and 4%. Other sites like Realtor also talk about recovering the real estate market, Europe seems to be following America yet Covid pandemic is infecting the world.

Infections as I told you this summer (given the optimism of many) would increase, in November the situation will become very critical to manage for world governments but the real estate market for now is immune to Covid.

I make a brief analysis of the economic situation, leaving aside the financial markets that are going incorrectly compared to reality, real problem remains real economy. Several of you I think will have seen the situation in cities with closed businesses, not forgetting the mini-lockdowns that will be there since states have to reduce the risk of contagion.

My question is how do data talk about growth if millions of people have or will lose their jobs?

Housing market seems unrelated to the real economy, let’s see why:

Monetary policies of accomodative from central banks

Interest rates at all time low

Opportunities for those who have the cash to invest

These are the first three reasons that determine the holding of real estate prices but I would like to add other important elements such as the incentives of states such as (bonuses, superbonus…) to renovate houses.

The design of properties conceived differently than in the past where the watchword is space, unfortunately the lockdown has changed the way we work (and not only) with the concept of smartworking. More and more families are looking for larger solutions and technological standards such as fiber connection, fast WiFi, charging points for electric vehicles and areas connected by public transport.

Another point that is supporting housing market is bank mortgages, several months ago in an article I expressly advised those who could or already have a mortgage with the bank to negotiate advantageous terms or renegotiate their mortgage at a lower interest rate.

Not to mention the demand for commercial warehouses in strategic areas of major cities, the answer is record ecommerce sales during lockdown. Not to mention Amazon, logistics companies like Dhl, FedEx, or domestic carriers need space to store packages from the online marketplace.

That’s all for the moment, I honestly have my doubts about the development of housing market and financial markets, but data say this, how long can this completely different situation last from the real economy?

After the US presidential election (November 3, 2020) I will do a further in-depth study to share new ideas and possible scenarios.

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