The paralysis of the economy caused by the fight against Covid-19 going to expel the most modest families in the real-estate market, and will cause a further deterioration in prices and a drop in operations in the middle and lower class neighborhoods, according to the estimates made by the Donpiso real estate.
The firm, which has 23 of its own offices and 71 franchised throughout the state, has estimated that this year home sales will fall between 20% and 25% and prices will decrease 10%. “The impact will not be like that of the financial crisis we suffered between 2008 and 2014, because we anticipate that the current situation will be temporary, and the market will recover in the first or second quarter of 2021“Highlights Emiliano Bermúdez, deputy director general of Donpiso. The firm’s estimates are based on the confinement being able to be lifted before the summer. “If it continues further, we will see additional falls to these that will occur in this first phase, and that could put us in a situation similar to that of those years,” he acknowledges.
Rents will not drop, nor will operations, because there is a lot of demand
The Donpiso study anticipates a decrease in demand, especially in real estate in the middle price segment, medium-low because their potential buyers will be the most affected by the foreseeable increase in unemployment, and because the banks will tighten the conditions to give them a mortgage. These families will therefore go to rental market, which in his opinion will not fall significantly in operations or prices. “Demand was already very strong now and we don’t think it will go too low, because even families that could buy in the face of uncertainty will prefer to wait.”
In his opinion, the crisis will also be fueled by the demand for second residences and vacation homes, mainly, because they are going to strongly decrease sales to foreigners for the restrictions to travel and for the problems that these families will have in their respective countries. “Technology allows you to buy a home without visiting it, but in reality no one buys if they do not personally visit the location, the environment, the light. The true utility of this technology is that it makes visits more efficient, because the buyer already has all the information, ”he assured.
Second home sales will drop 30% and prices 15-20%
According to Donpiso estimates, second home sales could experience sales drops of up to 30% and a price reduction of between 15% and 20%. The paralysis of the market will also cause closure of thousands of real estate.
In his opinion, on the other hand, the luxury market it will be temporarily paralyzed, until the new market prices are clarified, but in a few months it will be reactivated, such as sales to investors. “Housing will continue to be seen as a safer and more profitable investment asset than the stock market or fixed income,” he assured.