Our 'new normal' has become our 'new reality.' I get asked all the time how long I think it will last. I wish I knew. I am confident, however, on how the market will fair.
In March, I wrote a post titled, "5 Ways COVID Will Affect the Real Estate Market." I was right about 4.5 of the 5 things I predicted. This post examines what I believe will follow.
But first, just how right was I? Read on to find out.
YES. YES. YES!
As I mentioned above, your girl was right on 4.5 out of 5 predictions. Here's what, where, and how to move forward from here:
Prediction 1: List Now. The Rental Market Will Change: In March, I wrote, "I predict we're about to see a flood of Long-Term Rental (LTR) listings here in New Orleans. If you're thinking of renting a place long term or switching from short to long, list now."
I advised more than one landlord to list early in our stay-at-home era. I'm glad I did. I can't tell you the exact number of leaser AND buyer showings I've done where we've found pamphlets with house rules, notes on how to work the remote, or labels under light switches. But it's a lot. Many of these landlords claim the properties were never Airbnb's, but come on, who are y'all kidding?
This, among instability in employment - and now unemployment - is stirring the pot and adding to the supply. It's also tempting stable renters to seek greener pastures.
Conclusion: If you're sitting and waiting to list, list now. Times may not be ideal, but do you really want to tempt your luck? She hasn't been a lady since, well, 2019.
If you do have tenants pushing to, or hinting at, breaking their lease, get them involved in the hunt. List with a damn good agent and let the tenants know that if they find a suitable replacement, you'll bend on their lease length. Who dictates that suitable replacement? You, your agent, and Experian. Call me.
Prediction 2: Wait to Lease: In March, I wrote, "If [you're renting and] you've got flexibility on your current lease, sit tight. You may have a lot of inventory to choose from in the near future (see above)."
I was correct here as well. There's more choice in the market than before, and it's growing. You can lease a home with more space, better quality finishes, or both for less than you could before March. Plus, landlords are more likely to accept six-month leases or work with you on the price if you can prove income stability and sign for 24 months.
Conclusion: Landlords, the competition is fierce up your game or lower your price. Call me to list, and I'll provide you with a walkthrough and a customized plan.
Prediction 3: Demand in the Commercial Sector Will Thin: In March, I wrote, "Recent trends in experiential and communal/shared experiences are being hit hard, as are businesses that rely heavily on tourism, and/or the conference and convention business... If you're looking to sell or lease your commercial space, you'll need to craft your marketing very carefully."
Unfortunately, I was right here too. Businesses that are thriving under COVID are those businesses that know how to be creative with their space and their product. Businesses that do not rely solely on brick and mortar are more stable, but many brick and mortar businesses are reinventing their product and thus their payout.
One of my favorite new additions is JAM Nola, an experiential art space that dared to open this year. Their attention to safety and other protocols is exceptional.
One of my favorite old-world-new-thinking examples is brought to us by Commanders Palace. If you haven't experienced their Wednesday Wine & Cheese Party events, you're missing out, it's epic!
Conclusion: Landlords, rents - particularly in the traditional foodservice category - are way low. It's time to think more creatively about who may fit your space. Be flexible and offer rent structures and tools that make it more desirable. For example, sidewalk permits, graduated leases, and high-speed everything. Call me, and we'll brainstorm.
Prediction 4: A Shift Toward Real Estate Investments: In March, I wrote, "The downturn in the financial markets may be bad news for your stock portfolio. But, a wise real estate purchase is often a great long term investment strategy and a sure way to diversify."
In the name of diversification, I've been working to diversify my client list. This includes working with more and more investors and the occasional hard money lender. Moneymakers know that when housing stock is low, those who can produce more or better housing stock are left holding big ol' money bags.
Land and income-generating properties are also a great alternative to bonds.
Conclusion: If you're ready to stop playing Monopoly, and start investing in real property, let's talk. Investing in land, construction, and renovation is hot. Why? Supply is needed, and loans are available. Know your commitment, your schedule, your projected gains, and who to trust. If you'd like to get started down this path, call me. I can show you how and where.
YES & NO:
I mentioned earlier that I did get something wrong. How far off base was I? Only sort of.
Prediction 5: Invest Now - Interest Rates Won't Last: In March, I wrote, "Rates won't last, and newly listed properties may inflate their asking price as they know you'll now qualify for a bigger loan."
I was short in my prediction about the amount of time that lower interest rates would be available. Not only have they lasted, but they've also dipped to 50-year lows.
I was accurate about property prices inflating. With more buyers than homes, and far fewer available homes now than pre-COVID times, we've seen shorter closes and more bidding wars on moderately priced homes.
I was also right to suggest investing sooner rather than later. The Fed has promised to keep rates low through the end of the year. As we are in an election year, we have no line of sight as to whether these low rates will continue into 2021.
Conclusion: Invest now!
WHAT'S NEXT?!: Trends to Come
Now that I've proven to be more right than not on my short term predictions. Read on to discover what trends I believe will impact our 'New Real,' and soon.
Trend 1: Doubling Down on Doubles
The FHA is offering more generous paths to homeownership. A $400,000 home requires a mere 3.5% down, providing that the buyer has good credit and can generate income from their property. Thus, a swelling pack of new home buyers is on the hunt for double shotguns, and multi-family homes.
I predict that this, coupled with out-of-state STR owners offloading their investments, will result in an even hotter doubles market and more residents in more homes. It will also be tempting to new transplants from more expensive markets, who can work remotely and finally afford homeownership.
Conclusion: If you're tired of tenants, someone else won't be. List! If you're thinking of getting into the Landlord game and learning how to qualify for loans that make it possible, call me.
Trend 2: Closed-concept Floorplans
They won't be titled as such, but as we grow used to spending more time at home than ever before, the open-concept floor plan will become increasingly unattractive. This will be especially true in instances where one or more resident works from home and necessary where more than one child studies from home.
Pocket doors and other ways to compartmentalize space will be reinvented and remarketed as brand new solutions. Modular will be modern once again. Home offices will be extra desirable. And, people will finally know what to do with that awkward 'shotgun bedroom' you have to walk through.
Conclusion: Market privacy for the win. Describe open floor plans as a great way to make sure kiddos are on task. Want more ideas? Call me.
Trend 3: Where the Green Grass Grows
Your "too small" is someone else's "palatial." Pied de Terre's and small vacation condos in multi-unit buildings will become less chic for native New Orleanians. They will hit the market once parades get postponed, again.
In the burbs, as park settings stay crowded, buyers will be on the lookout for yards. Are you tired of working out in your living room? Me too! Buyers with extra disposable income will look to dispose of said income by tossing it into home gyms, pools, etc. Proximity to boat slips, golf courses, and other outdoor clubs will be super attractive.
Conclusion: Selling your vacation home? Appeal to dense markets like New York, San Francisco, and Austin. Get an excellent stager and an even better agent. Look for an agent with out-of-state networks. Let's talk.
Every home is someone else's 'matchbox of their own.' Show off nearby amenities. Proximity to 'new-real' must-haves is critical. DIY photography will not fly, nor will a basic listing description limited to the home itself. Appeal to inner-city buyers, who are newly open to greener pastures. Call me.
Trend 4: Highspeed Everything
Speaking of home offices, it's time to invest in highspeed everything. The French Quarter is currently in talks with the necessary partners to introduce 5G, and with more reason than ever before. Before our 'new-real,' we had slowdowns when multiple people used multiple devices in one block. Today we have multiple individuals using multiple devices in the same household.
Conclusion: Whoever can crack this issue first is going to make some big money. My money isn't on COX.
Sound home investments include fiber optic, tesla batteries, and network extenders.
Trend 5: Tenants Shift to Buyers
If you're biting your nails over your tenants having stable jobs, and your property competing with attractive new listings, here's one more for you. Low-interest rates and low down payments are turning renters into buyers. A buyer with $20K in the bank can buy a home around $400,000 and pay $2,500 each month for mortgage, taxes, and insurance.
Furthermore, this cost can be offset by renting part of their property. One side of a double can generate $1,200 or $1,500 a month, depending on the neighborhood. Thus, it only takes $20K down and $1,500 or less a month to own.
Conclusion: If you seek tenants, make sure your agent has a strong out of state network and killer marketing skills. If your property is at or over $2,000 a month, your newest tenants will likely be new to the city. I can help.
If you're thinking of becoming a landlord and want to know how to acquire said, $400,000 home, let's talk. You'll want your credit to be in the high 600's, and if it's not, you can get there with the right plan, call me.
Bonus Heads Up: Millennial Buyers Take Flight
The primary candidates for these FHA products are new home buyers. They come in many shapes, sizes, and ages. The most popular demographic, however, are those aged 30-45.
The Internet didn't dawn on this age group, this age group dawned on the Internet. They're more likely to consult listing websites, blogs, etc. to empower themselves when buying a home. This will lead to more freak outs, $%^& ups, and oopses. We'll see a higher percentage of in-contract cancellations, by know-it-alls who didn't know better.
Conclusion: If you fall into this camp, I get it, slow down.
Buying a house is not like buying a car, or a bike, or rescuing a dog. A lot goes into it. You aren't expected to DIY the lending, home search, or negotiating processes. Don't worry about owning the process. You'll be better for enlisting a co-pilot.
Every Netflix special has portrayed real estate agents as schmucks, victims, crooks, or flesh-eating yuppies. But, hundreds of hours of training are required on everything from contracts to contract law, and financing to appraisals, home inspections, market research, and more to get licensed.
I bet you're damn good at your job. So am I. Call me, I'd like to help you crush this.
NET/NET
I can't predict what's next for America, the world, or a virus. I'm not trained in that department. What I am is passionate about people and property. I'm a student of the market, and I take more W's than L's.
I'd love to apply all of that to you and your needs. To make navigating the process enjoyable and make the outcome a success. Got a dream? Ask me about a plan to make it a reality. Want to know when this 'new-real' will go back to 'normal?' Damn, I wish I knew!
Voted Neighborhood Favorite by Nextdoor, Team Cool Murphy is a top-producing, licensed real estate team based in New Orleans, brokered by Cool Murphy, LLC.
Celebrated for her next-level creative approach to real estate, Elisa Cool Murphy is an award-winning, top-performing agent in New Orleans and the founder and leader of Cool Murphy, LLC.
Contact Her -
email: cool@coolmurphy.com
Facebook: @homeinneworleans
IG: @coolmurphynola
YouTube: @coolmurphynola
phone: 504-321-3194
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