An economic pinch has been felt across all sectors of industry as the coronavirus spreads worldwide, driving down the stock market, wreaking havoc on consumer confidence, and disrupting travel worldwide. Investors worldwide, however, may have found a lucrative safe harbor in real estate.
The rush to real estate comes in the wake of a worldwide economic slowdown, where most other sectors have been hit drastically. As the outbreak widened, many investors turned to assets such as gold (NYSE: GLD) and other precious metals, which have traditionally been safe havens during economic downturns. The coronavirus outbreak, however, has created a unique situation for real estate, in that the government response has inadvertently helped the market. The Federal Reserve's interest rate cut, which coincides with a price drop in many construction commodities such as lumber, has left the real estate market in a unique position not only to weather the coronavirus outbreak but may benefit from it.
Online real estate market Roofstock, which lists postings for homes, has noted a significant spike in traffic from certain regions. Roofstock noticed a 500% spike in traffic from Asia, a 450% spike in traffic from Germany, a 250% spike in traffic from Australia, and a 100% spike in traffic from the U.K. "I think it may be people looking to invest capital into what may be perceived as more stable areas that don't have as much of an effect, at least not yet, from the virus," said Roofstock CEO Gary Beasley, "I think people look at hard assets, things like real estate, which are uncorrelated generally to the stock market, and specifically US housing, that tends to perform quite well on a relative basis during times of market volatility."
Roofstock and other online real estate services are in a fantastic position to capitalize on the upward trend of real estate due to their online listings. Online real estate markets allow investors to peruse listings and make investments without having to risk traveling during the outbreak. Investors have used to their advantage to find safe havens for their investments.
For other realtors, however, including many smaller, locally-oriented agencies, the bump in real estate investment is not felt to the same extent, or at all. Instability on Wall Street has caused some domestic home buyers to put off purchasing homes, mainly due to the hit their portfolios have taken from coronavirus related stock market disruptions. Additionally, fears of travel have put others off of traveling to pursue prospective homes. For potential homebuyers, lowered interest rates may not have much of an appeal in the face of travel fears and a smaller portfolio.