Real Estate Market Faces Odd Change in Trends Over the Past Year

As the pandemic continues to change how we live and work, residential and commercial real estate market outlook remains in fluctuation. Whether it’s people moving into a new house or businesses opening in the local area, it is evident that we are using land and property, and the amount people are willing to pay for is changing.

“Our market now is pushing outward. 45% of our sales are first-time home buyers, and that is a strong indicator of a strong market,” Says Jim Fox, Broker and Vice President of sales at Stouffer Realty.

Residential real estate has become a bright spot in the market. At the beginning of the pandemic, people were forced to spend more time at home working and living, causing them to become less dependent on living near their workspace. With families having to stay at home, people have become cooped up, driving up the demand for larger residential properties.

“During this period, most people were home. They have never really lived in their home and used their home and spent the amount of time in their home as they have recently,” Fox says. “People can’t get away from each other. if you have to make a conference call or have to do something and things are going on in the house, they need to go somewhere.”

But this is not the only reason or even the main reason why the residential market is doing so well. People are leaving their homes to find new homes because of all-time low-interest rates. On the national level, according to FreddieMac, a federally chartered mortgage investor interest rates have dropped and stayed below 3% in 2020, which is good news for home buyers.

Even locally in Ohio, we are seeing low-interest rates, “As far as interest rates, the price of real estate is much different here, our affordability factor is higher than most other States, and that’s a great for first time home buyers,” says Fox.

It has not been as big of a change in the market for commercial real estate, but it is a little more complicated than residential housing sales.

“It’s different depending on the sector and the type of business, it’s definitely had an impact; it hasn’t been as negative for all sectors. Retail was hit really hard, and so were restaurants. But you’re also still seeing a lot of investors still looking to invest in investment properties, says Pat Powers, President of Pappas Realty Co.

Unlike residential real estate, the commercial real estate market at the beginning of the COVID pandemic was not good. Some businesses were forced to close, and some could not afford their mortgage and rent payments without customers, but the market has made a strong recovery.

“For a couple of months we really dropped off hard, in March into May the phones weren’t ringing at all,” says Powers, “Then after things started opening up people we’re back out, looking around, wanting to invest, and banks are still making loans, so there’s still a healthy amount of activity.”

While both markets are back to normal or, in some areas and instances, better than normal, these markets have begun to face the same problem—demand vs. inventory.

“One of the things we’ve been running into is a shortage of good industrial buildings. We have gotten a lot of demand, and I think some of it’s being driven by distribution. As we change our buying habits and things like that, companies want to be more responsive to the market,” says Brad Ehrhart, President of Portage County’s Development Board.

This has brought on limitations on what buildings are available for different business investors. As buildings become available in the local area, they’re bought faster because of the scarcity.

“We have had so many different investors that are looking for a specific type of investment property, and they’re just not available right now. They go really quick, especially if it’s priced right,” says Powers.

As business investors try to find commercial buildings’ properties, we are seeing the same trend with first-time home buyers. The problem of inventory vs. demand has affected the commercial real estate market and all real estate markets, including residential.

“Right now, the average property, it only stays on the market for less than 30 days, says Fox. “The real thing that we’re focused on right now is trying to find homes and people that want to sell their home. The problem is if the seller sells their home, they’re going to have a problem finding a new home.”