It’s been a few weeks, but somet time ago, we’ve talked about the weird and odd effects of the pandemic, the ones that are entirely strange and unpredictable, but not very serious. This time around, we’re going to talk about the effects which are easier to understand, but also a lot more severe. Take a brief look at the five changes to the real-estate market in 2020 that are set to continue this year, all due to the pandemic.

 

5. Low interest rates

The financial knock-on effect on the economy as a whole has been devastating, but a surprising offshoot was record-low interest rates for mortgages. The 30-year loan at a fixed rate of interest would cost you on average 2.65% more to pay off at the beginning of the year, a 0.2% drop. Not that big of deal? Well, if you are paying off a debt over 30 years, even a single 0.1% hurts a lot. And now the loans are easier to get because of that reduction, but that’s not just a happy coincidence. This is an actual mechanism to rein in the galloping increase in prices, and yet it would be very hard to predict that happening.

 

 

4. Home sweet home

That’s because the prices weren’t galloping in early 2020. At the beginning of the pandemic, housing market just stalled the world over. No-one knew what to expect from COVID, so no-one bought or sold anything. But a few months into the isolation and lockdowns, and suddenly houses started to sell like hot cakes. In June, the market in the US shot back up 21%, after initially falling more than 28% between March and May. Things only continued to get rosier later in the year. The main reasons are feeling the need to have more space, access to nature without going too far out of your domicile and an increased acceptance of commuting. Remote work has taught most of us to work far from the office and not to mind long time getting to the office – which is still an open issue for many.

 

3. Suburbs welcome

And this brings us to the 3^rd major shift – not that major, come to think of it, until you consider the specifics. As the example of suburban New York shows, people are really, really getting head over heels in love with the ‘burbs all of a sudden. Where previously the trend would be observable – it is the mantra of this millennium, after all, to live slower, quieter, simpler lives – now it’s getting a very surprising boost.

 

 

2. Over the ask

According to local realtors, people have been buying more houses in a markedly different way, too. They offer above asking price – a first for many corners of the property market. Would-be homeowners are aware this is now a seller’s market. Supply of new houses is lagging behind increasing demand – as more and more people are willing to move out from the city and into the suburbia since there is literally no advantage to living downtown anymore. Theatres? Closed. Restaurants? Takeaway, please. Parties and get-togethers with friends? Zoom parties and Teams bashes nowadays. With that it’s hardly surprising that people are desperate and wish to win out the competition by bidding higher on their dream home.

 

 

1.Cash, cash baby

In some locales, up to 40% of all the house-buying transactions were done with cash. It’s a surprising turn of events, considering mortgages (or specifically, interest rates) were set so low to stop the rampant overpricing and deflate the subsequent bubble. What no-one could have predicted is that people would forego financial leveraging altogether and carry on buying with their hard-earned instead. Direct cash buying of houses is something usually reserved for the megarich, but apparently, average middle-class Joes have deep pockets. Or big mattresses.

 

 

What’s the upshot from all of this? Well, right now, banks lose out due to low rates, economy seems to be suffering, too. The home prices are still climbing, despite record-low interest rates, so the attempt to curb overpricing has failed. The housing market is booming, but it’s a very, very shaky bubble. Sell now while you can earn big bucks, but buyer beware; what costs you an arm and a leg today may be worth cents on the dollar next year. Or maybe work against the market and move back into the city; perhaps it’ll get cheaper there?

 

 

VOCABULARY

odd – dziwny
unpredictable – nieprzewidywalny
severe – dotkliwy, ostry
brief – krótki
real estate – nieruchomości
interest rate – stopa procentowa
knock-on effect – efekt domina
devastating – druzgocący
offshoot – odłam; tu: efekt uboczny
record-low – rekordowo niski
mortgage – kredyt hipoteczny; hipoteka
fixed – stały (np. oprocentowanie)
to pay off – spłacić
not that big of a deal! – nie taki znowu wielki problem!
debt – zadłużenie
coincidence – zbieg okoliczności
to rein sth in – pohamować coś, spowolnić
galloping – galopujący (rosnący, np. cena)
to predict – przewidzieć
home sweet home – nie ma jak w domu
housing market – rynek mieszkaniowy
to stall – zatrzymać się, spowolnić
lockdown – kwarantanna narodowa
to sell like hot cakes – rozchodzić się jak gorące bułeczki
initially – pierwotnie
rosy – różowy (np. o perspektywie)
domicile – domostwo, dom
commuting – dojeżdżanie do pracy
remote work – praca zdalna
to mind sth – nie akceptować czegoś, nie lubić
suburbs – przedmieścia
shift – zmiana, przesunięcie
…come to think of it… – jak już się o tym pomyśli
to consider sth – rozważyć coś, zastanowić się nad czymś
head over heels in love with sth – szaleńczo w czymś rozkochany
‘burbs – przedmieścia
all of a sudden -ni z tego, ni z owego
observable – widoczny
boost – zwiększenie, wzrost
over the ask – ponad cenę wywoławczą
realtor – agent nieruchomości
markedly – znacząco
asking price – cena wywoławcza
a first for X – coś niebywałego w X
many corners of sth – różne strony/obszary czegoś
would-be – potencjalny, niedoszły
homeowner – posiadacz domu
seller’s market – rynek, na którym nieźle zarabiają sprzedający (mało podaży, dużo popytu)
supply – podaż
to lag behind sth – pozostawać w tyle za czymś, nie nadążać
demand – popyt
willing to do sth – skłonny, chętny do zrobienia czegoś
to move out – wyprowadzić się
suburbia – przedmieścia
advantage -korzyść, przewaga
downtown – centrum miasta (US)
takeaway – na wynos
get-together – impreza, spotkanie towarzyskie
bash – imprezka
nowadays – obecnie
hardly – wcale (nie)
to win out – wygrać (z kimś)
competition – rywale, konkurencja
to bid on sth – licytować coś, złożyć ofertę na licytacji
locale – obszar
X turn of events – X splot wydarzeń, X (np. dziwny) zbieg okoliczności
rampant – niepohamowany
overpricing – zawyżanie cen
to deflate sth – zdmuchać coś, spuścić z czegoś powietrze
subsequent – kolejny, następujący (po czymś)
bubble – nietrwała koniunktura/wzrost gospodarczy, chwilowy bum
to forego sth – darować sobie coś
leveraging – wykorzystanie dźwigni (finansowej)
altogether – całkowicie, zupełnie
to carry on doing sth – kontynuować robienie czegoś
hard-earned – tu: gotówka, ciężko zarobione grosze
megarich – najbogatsi ludzie
average Joe – przeciętny Kowalski
upshot – wynik, rezultat czegoś
to lose out – przegrać, stracić
to curb sth – pohamować coś, powstrzymać
shaky – chwiejny, niestabilny
big bucks -wielki szmal (US)
buyer beware! – kupujący, strzeż się!
to cost an arm and a leg – kosztować krocie
worth cents on the dollar – wart ledwie parę groszy (choć kosztował wiele więcej) (US)

by Prochor Aniszczuk

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