Slower Mobility Expected to Transform Real Estate Markets

The coronavirus, which has changed personal behavior and frozen a great deal of social and economic activity, has also reduced the movement of people, slowing real estate markets, according to a new report from a professional organization.

It’s also likely to transform the way real estate markets work for years to come, according to a report from The Counselors of Real Estate, an invitation-only group of 1,000 leading real estate advisors, that said COVID-19 has created “unprecedented challenges to mobility.”

The pandemic and economic renewal were the top two issues listed in CRE’s report, “The Top Ten Issues Affecting Real Estate” for 2020-21.

“The flow of people between and within countries has always been a critical driver of real estate and the economy as demand increases where population flows,” said Michel Couillard, a Montreal-based real estate adviser, who’s the 2020 chairman of The Counselors of Real Estate.

Densely-populated cities–which were the first to feel the brunt of the pandemic in the United States–may be hard-hit in the long term. The reports cited a recent Harris Poll showing that 40% of city dwellers are considering relocation over concerns about the coronavirus and the economy.

“In recent years, urban areas have successfully captured more affluent and younger people attracted to job access, public transit, entertainment, restaurants, and other advantages.” said the Chicago-based CRE. 

If the value of those amenities becomes less important, and remote work innovations make city access less relevant, suburbs could grow more rapidly.

The report said “Sunbelt” states with historically high inbound migration–including Florida, Nevada, Colorado, Tennessee and Arizona–are facing particular challenges, as mobility has slowed.

Rural areas in the United States may see accelerated population loss and decline in economic growth because of the relative scarcity of medical facilities and their proportion of aging persons, the CRE report said. Those attributes have been significant negatives during the COVID-19 crisis.

But those effects could be offset by significant investment and innovations in telemedicine, remote working, remote entertainment, and the desire for a lower density living environment, according to the report.

The CRE report also pointed out the impact on real estate globally as COVID-19 has been a drag on the free flow of people from country to country.

Immigration has essentially ground to a halt, where the pandemic has added to forces initially driven by U.S. policies, among them tightening of visa restrictions for incoming students and workers since 2017, the group said.

“Nationalism and now COVID-19 have reset the playing field for now, limiting migration, slamming the economy, and limiting international cooperation,” the CRE said. “Real estate implications will be determined by how long behavioral changes brought on by the virus last, the quality of innovations that emerge in healthcare, living, and working, and the caliber of world leadership.”