Philadelphia’s housing market has been in the middle of a housing boom. Renovations of old properties, development of new, and a surge of first-time homebuyers, has been an incredible buoy for the real estate industry in Philly.
Now that COVID-19 has essentially pressed pause on economic interests nationwide, anyone with an interest in the Philadelphia housing market is wondering what the impact will be.
Currently, nearly all construction in Philadelphia has been put on hold. There have been numerous layoffs in virtually all areas of housing; real estate companies, construction companies, and even design firms. As Philadelphia’s end-of-construction date arose, layoffs began en masse, essentially crippling the industry indefinitely.
With the aftertaste of the troubles caused by the Great Recession still in their mouths, many in the housing industry are wondering what things will look like for them in the end.
Will it be next to impossible to get a project loan as it was back in 2008? Will everything in the housing industry, from construction, to renovations, to real estate, simply crawl, painstakingly slowly, back from where it is halted due to COVID? Will people get their jobs back or will it be a difficult process to build teams back up and get things flowing once again?
A Positive Outlook
The good news is, most people in the Philadelphia real estate industry don’t think the outcome will be as drastic, devastating, or long-standing as the outcome of the Great Recession. In fact, it seems to most that everything really has just been paused.
People haven’t changed their plans, they’re not backing away from their goals to buy, build, renovate, or develop. Most of them are actually chomping at the bit to get back on track. Many people are spending their time in lockdown working on their plans for after recovery, so that they can hit the ground running when the time comes.
Unlike the time of the Great Recession, people are not weary about getting out there, making plans, and spending money. In fact, they are highly anticipating the time, and preparing themselves for it.
While it is understood that things will be difficult, especially with so many people who are currently out of work and small businesses unsure of their survival, the general consensus is one of positivity. Through the positivity though, each sector of the real estate market is realistic about the unique troubles that they will likely face.
Lending and Real Estate
It is expected that lending will begin to decline in the second quarter of 2020, and will then experience a rebound. However, the credit market is expected to stay tight, which will make housing less affordable for potential homebuyers.
Construction and Development
Construction and development faces its own troubles, as the longer a project sits undeveloped, the more money is lost by the developer. Smaller projects that have been paused mid-way may still have the funds to resume construction once restrictions have been listed. However, larger projects such as multi-family dwellings or commercial buildings, may have a more negative impact.
Developers need to determine whether the potential risk of failure is worth weathering the storm and reconvening on the project when all is said and done.
In the end, dealing with a pandemic such as COVID-19, is something that none of us has ever done before. The true impact on Philadelphia’s housing industry will depend on a number of factors. One of the largest factors is how long the freeze of the economy will last.
While most businesses can withstand the difficulties of being closed and stalled for two or so months, they might not be able to if the freeze continues longer than that. There are so many unknowns and contributing factors that make this time especially worrisome for people who work in the housing industry.
Overall, people are excited for their lives to get back to normal. Getting back to work and school, finishing projects, and joining with neighbors to jumpstart the economy, seems like a treasure.
No matter what fallbacks the housing industry receives from COVID-19, it’s important to remember that this too will pass. Soon, it will be time to get back to work, get back to planning, and to jump start the economy.