COVID-19

Pandemic could mean opportunity for real estate investors

Andy Uhler Apr 7, 2020
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Could the post-pandemic housing market look similar to the post-Great Recession market? Justin Sullivan/Getty Images
COVID-19

Pandemic could mean opportunity for real estate investors

Andy Uhler Apr 7, 2020
Could the post-pandemic housing market look similar to the post-Great Recession market? Justin Sullivan/Getty Images
HTML EMBED:
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The COVID-19 pandemic has left no industry untouched. Many Americans and property owners didn’t have the cash to pay their rent this month. Which means some landlords are going to struggle with the mortgage, which means an opportunity for some property investors.

During the last financial crisis, there was a lot of distressed property to be had in South Florida.  

Daniel Lebensohn, co-founder of the investment firm BH3, said buying that distressed debt built the foundation of his company. He said nobody feels good about taking advantage of misfortune, but firms will be looking at this pandemic in the same light. 

“Now’s the time to innovate and go hunting because there will be opportunities,” Lebensohn said.

But KC Conway, chief economist at the CCIM Institute, thinks market changes will come in two phases.

“Phase one is really a repricing opportunity. And I think then the acquisition comes a little bit later, maybe six months down the road,” he said.

That’s because the real estate market moves slowly, and this pandemic is only a month old in the United States.

“It’s not as if anybody who owns anything is suddenly going to step up and say, ‘Oh, sure. A month ago, I could have sold this building for $400 a foot, but because I’m afraid of what’s happened in the market, you can buy for $200 per square foot,’” said Jim Costello, senior vice president at Real Capital Analytics.

He said it could get there at some point, it’s just not there yet.

And the hospitality sector is going to have an especially difficult time weathering this storm.

“Some of the areas like the hotels and the travel related … the restaurants, many of those are fairly tight on their cash flow and could actually be facing a situation where they need a buyer fairly soon,” said Calvin Schnure, senior economist at Nareit. 

And retail office space, one part of the market that many viewed as fairly safe, could be compromised because so many people have learned to work from home.

COVID-19 Economy FAQs

With a slow vaccine rollout so far, how has the government changed its approach?

On Tuesday, Jan. 12, Health and Human Services Secretary Alex Azar announced changes to how the federal government is distributing vaccine doses. The CDC has expanded coronavirus vaccine eligibility to everyone 65 and older, along with people with conditions that might raise their risks of complications from COVID-19. The new approach also looks to reward those states that are the most efficient by giving them more doses, but critics say that won’t address underlying problems some states are having with vaccine rollout.

What kind of help can small businesses get right now?

A new round of Paycheck Protection Program loans recently became available for pandemic-ravaged businesses. These loans don’t have to be paid back if rules are met. Right now, loans are open for first-time applicants. And the application has to go through community banking organizations — no big banks, for now, at least. This rollout is designed to help business owners who couldn’t get a PPP loan before.

What does the hiring situation in the U.S. look like as we enter the new year?

New data on job openings and postings provide a glimpse of what to expect in the job market in the coming weeks and months. This time of year typically sees a spike in hiring and job-search activity, says Jill Chapman with Insperity, a recruiting services firm. But that kind of optimistic planning for the future isn’t really the vibe these days. Job postings have been lagging on the job search site Indeed. Listings were down about 11% in December compared to a year earlier.

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