As the global pandemic continues to take its toll on the economy, one sector is feeling the heat more than most – real estate. The real estate market had already been experiencing a slowdown for some time prior to the pandemic, but the spread of Covid-19 has exacerbated this situation severely. Property prices are dropping rapidly and the landscape is changing drastically.
But why has the real estate sector been particularly hard hit? The answer lies in the concept of seasonality. Seasonality is defined as the fluctuation of an activity with the changing of seasons. This is seen most clearly with the stock market – it is generally more active in the summer months and quieter in the winter. The same is true for the real estate market, where traditionally, the spring and summer months are the best times for buyers and sellers to make deals.
However, the pandemic has upended this traditional pattern. With people avoiding close contact with one another, suddenly the real estate market has become a virtual non-entity. This means that instead of people thronging to real estate agents and estate sales in person, everything has been confined to the online platform, where it is much harder and less attractive to make deals.
Moreover, buyers and sellers have developed cold feet because of the uncertainty surrounding the pandemic. People are unwilling to purchase property until they’re certain that it’s safe to do so. This has led to a stagnation in the market, where few transactions are taking place and those that do tend to be at extremely discounted prices.
These factors, when combined, have had a profoundly negative effect on the real estate sector. Prices are falling on almost every property type and the entire sector is in a state of flux. The good news, however, is that this may not last forever. By the time the pandemic is over, the sector will likely spring back to life and people will be able to make investments in the property market once again.
Until then, however, real estate owners and agents will have to weather the storm and be prepared for the eventual recovery. Seasonality may have dropped a big bomb on the real estate sector, but the sector can still come back from this slump and may even be stronger than ever.
