By Igor Popov | YourValley.net
The spread of COVID-19 in the United States is alarming and still highly unpredictable. As communities embrace precautions such as school closures and ‘social distancing,’ a new quarantine economy has already altered daily life nearly overnight. These necessary behavioral changes will have economic ramifications that last beyond the quarantines themselves.
Today, social distancing is transforming homes — many Americans have reconfigured their homes into offices, kindergartens, and gyms in the past week. In addition to these immediate changes, the pandemic and its ensuing economic consequences are poised to transform the housing market in lasting ways. It is too early to predict magnitudes as we both learn and adapt together, but we should already be aware of the key mechanisms to expect as COVID-19 reshapes the housing market.
1. Mobility will be low in the near-term and spike in recovery
Moves fuel the housing market. In the coming months, both safety concerns and economic uncertainty will keep more people in their current homes. Geographic mobility generally declines during downturns, when a lack of job opportunities catalyze fewer long-distance moves across markets or housing upgrades.1 This time around, infection concerns and social distancing will lead to even fewer people wanting to move. Eviction and foreclosure moratoriums will further slow mobility by keeping households affected economically from experiencing housing instability during a health crisis.