Covid Impact on Real Estate Sector

In early 2020, the global pandemic Covid-19 had brought the world to a halt, bringing uncertainties and unprecedented challenges in the world economy. The lockdowns brought the manufacturing facilities to a standstill and disrupted the entire global supply chain. The pandemic placed millions of livelihoods at risk by obliterating jobs and forcing employers to opt for salary cuts. In a brief five-week period spanning between March-April 2020, the United States economy witnessed a loss of more than 22.4 million jobs. As a result, it exposed an estimated 30 to 40 million people in America to the risk of eviction in the next several months.

The progress in recovery of the real estate sector

The housing sector has largely seen a downward trend during 2020 as homeowners were hesitant to sell amid pandemic and potential buyers deferred their investment decision due to the uncertainties prevailing in the real estate market. In the U.S., the coronavirus turmoil did not lead to large price declines. The combination of low supply and low mortgage rates allowed prices to remain steady. The construction of many housing projects was halted and delayed due to the shortage of migrant labor, disruptions in the supply chain of building materials, and stay-in orders. Areas that were severely hit by the pandemic saw steep drops in home sales.

In the context of the U.S. economy, nonfarm payroll employment witnessed 559,000 new jobs in May 2021 while the unemployment rate fell from 13 percent in May 2020 to 5.5 percent in May 2021. Economic distress caused by Covid and reduction in savings have drastically changed the way people want to spend their money and the value they expect from a product.