Eventually, scientists will develop a vaccine for COVID-19 and life will return to some semblance of normal. Kids will attend school in classrooms with peers, grocery shopping won’t require masks, and we’ll be able to gather with friends and family to celebrate special occasions.
However, some things will never go back to the old normal. If we see someone wearing a mask, it won’t seem like the weirdest thing in the world. We may choose a fist bump or an elbow bump in greeting rather than a handshake. And anyone who doesn’t cough and sneeze into their sleeve or away from their companions will be considered horrifyingly inconsiderate.
In real estate, I also see some permanent changes from the pandemic. Working from home is likely to continue because old myths have been busted. Before COVID-19, many companies held to the belief that employees needed to be in the office to be productive, but COVID-19 debunked that myth. Turns out, many companies saw an increase in employee productivity after everyone was sent home because of the pandemic.
All the natural chit chat that occurs in offices disappeared. No one was asking, “How was your weekend? What movie did you see? Where did you go to dinner?” And so on. Polite secretaries were no longer walking by their bosses’ offices, popping in to wish them good morning and see if they need anything—breaking the manager’s concentration in the process. Multiply those pleasantries by all the employees in a company and the time adds up, as does the broken concentration.
So, it looks like telecommuting is here to stay and that will change real estate in several ways. People will no longer be as tied to a geographic location, one within commuting distance of their employer. Workers simply need a fast internet connection to be anywhere in the world in moments via video conferencing.
People from major metropolitan areas who are tired of paying three times as much for real estate may opt to move out of the city. Lately, cities are full of protests, traffic, and COVID. By comparison, rural counties like ours are full of open space and friendly communities, which is wonderful as long as there’s not a wildfire raging nearby.
This exodus from the city will put downward pressure on city housing prices and upward pressure on rural housing prices. I don’t think a house in Ukiah’s Westside will compare in price with one near Chrissy Field any time soon, but I do think preferences are shifting. And prices won’t be the only thing feeling the pressure. Increased populations in rural areas will put a significant strain on essential infrastructure such as water and sewer, electricity, internet cabling, roads, and more.
More telecommuting and less commuting will likely lead to a whole series of changes. People will need less gasoline, provide less wear and tear on roads, and likely need fewer services from tire shops, mechanics, and gas station minimarts. If two people don’t have to get up and drive to different work locations every morning, they may opt to own only one family car.
With fewer trips to town, people may be more likely to shop online rather than making an extra trip to pick up something that Amazon can deliver to their doorstep in 48 hours. In short, companies may not need as much (or any) office space or retail space.
As the commercial real estate market contracts, I think the residential real estate market will expand. People will need more space for a home office or two, or at the very least, a home configured differently. If parents of young children are working from home and not putting their children in daycare, they may want a bigger yard.
This microscopic virus may end up making really big changes in the way we live, work and play.
If you have questions about real estate investing, please contact me at email@example.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years.