It’s tiring being ahead of the curve, but here I am once more. As I finish the Penthouse Plunge and prepare for an eventual sale, I think renovation is about to catch fire. Here’s why.
Housing Market is Slow to Catch Up
Continuing my train of thought, Dallas is tens of thousands of housing units behind in construction and it seems, at least in the short-term, that COVID-19 will slow new construction to some extent. This means that the actual supply of homes, already tight, is about to have trouble getting into its fat jeans.
Couple that with sellers not selling and not only aren’t there enough physical houses, but the inventory that keeps the machinery of buying and selling going isn’t being replenished as it should. The most obvious part of the problem is that sellers don’t want you breathing in their homes. But even before COVID-19, there was an element of sellers who were afraid to list their homes out of fear they’d sell before they were able to buy. Now with inventory being even lower, it’s making them hesitate further.
Finally, there’s the double-edged sword coming out of COVID-19 in the form of new ways to work. A lot of people sent home to work like it (and will love it once daycare and school restart). Armed with proof of sustained productivity, a lot of businesses will like it too and allow more work from home scenarios.
More Needs For Different Spaces
If people are working from home more there are two big changes coming to housing – space allocation and distance. I have often wondered whether tertiary cities with cheap housing that have been declining for years will see a pick-up in interest. If you’re only in the orbit of a particular city for work, cutting that string while maintaining a paycheck might open up new migration patterns.
I’m a perfect example of this. Since my original Chicago, I lived in five different cities in the space of a decade, solely because of work. Once that string was cut, I chose to move from Phoenix to Dallas twelve years ago and haven’t worked out of an office since.
Then there’s more local distance. What if your job offers you work from home at least part-time? Let’s say that you will be able to work from home two days a week. Are you willing to commute further if it’s only three days a week? Would you ditch the mid-cities and choose more socially vibrant Dallas or Fort Worth if you had to fight traffic less?
COVID-19 Will Bring Change to The Market
Finally, there’s space allocation. Has working from home been a breeze? What have you learned about carving an office space out of your existing home? If working from home becomes more permanent, what changes would you make? Do you need an extra bedroom/office that you can shut the door on? If you’re a couple, do you need two permanent office spaces?
All of this together says that the post-COVID-19 real estate market will bring change. Certainly many people will just sell their homes or change apartments to get the extra space they require. But remember, with for sale inventory freaky low and the overall housing shortage, that’s not going to be easy for a while on the purchase side. Besides a lot of people needing more space don’t want to move. Condos and apartments make this a little easier in that they can get a larger unit without leaving the building – because it’s not like they can add-on or setup a desk in an unused parking space.
Changing Spaces, if You Can Afford it
This is where a wave of home renovation comes in. Home additions, garage conversions and plain old reconfigurations will ramp up as soon as people feel comfortable with workers in their homes.
I think that like pulling a thread, the initial urge will be to figure out new working conditions, but for those with the money, a fuller renovation will result.
This will create another pinch-point – securing good contractors to do the work. At the best of times, the communication skills of the construction trades are poor. They only want you when no one wants them. They also have a habit of taking on more work than they can handle resulting in threadbare crews and subcontractors stretching completion dates into infinity.
This is already happening. My Penthouse Plunge contractor is chomping to get my job finished (as are we all) because he’s got work lined down the block.
So regardless of where you are in real estate, changing that situation is going to be trying on all fronts for some time. Buying, selling and renovating will each face their unique challenges, but challenges they will be.
On the upside, you can also take this time to undo prior questionable choices …