This year has been a roller coaster for the real estate market. The year started as usual, but the rental market made a complete turn around when the virus hit. Things improved with the opening of the beaches and boardwalk, then fell again when a number of states began closing down a second time.
With tourism being the major income producer for Worcester County, there is no question the local economy has taken a hit. The weekly vacation rental market is experiencing severe losses this summer. These losses have been caused by a myriad of distractions that have occurred since March. Many properties have only one or two weeks booked for the entire season. Other buildings are a little more fortunate, those that are located closer to the boardwalk, or those on the direct ocean front. However, even the best rentals are down by 20 to 30%.
Many vacationers are deeply concerned, and are hesitant to travel due to the virus, others have lost jobs and some have health conditions (that make them vulnerable to infection). There are many individual reasons that beach goers are skipping their vacation this summer, or at least shortening their stay.
With the economy taking such a hit from the Coronavirus, it is surprising that the sales market has such vitality.
With interest rates plummeting, buyers are more confident to purchase and are taking advantage of cheap money. Real estate sales have been steadily climbing causing a shortage of available vacation and investment sales listings.
The difficulty for buyers, going forward, will be locating a property to purchase. The market is sparse with 702 settlements that occurred between April 1 – July 9, 2020 and only 672 properties available in all of Worcester county and only 201 condominiums, or investment properties, in Ocean City. This makes for a very strong seller’s market.
The National Association of Realtors predicts “Inventory will remain constrained, especially at the entry level price segment.”
While available properties remain limited for now…the fall may see a turn around. Owners will need to shoulder the carry cost of their properties over the long upcoming winter. This will make it more burdensome with reduced rental income from the 2020 summer rentals. The result may be that owners will look to remove that burden by listing their properties for sale.
Considering the losses that most investment property owners are facing this summer, I would expect to see more units listed between September and December.
Should only 25% of owners (suffering from such losses) list their property for sale at the end of the summer, the market would become saturated with listings. The outcome would be to flip this seller’s market to a buyer’s market this fall. A buyer’s market would, of course, cause some drop in prices. However, the market overall sales should remain steady with interest rates expected to increase moderately to (no more than) 3.8%.
If you are an owner of an investment property, and feel you may need to sell this year, you may want to consider listing your unit while the inventory is low. Contact us today!