Now What?

Consumer confidence will slowly return – this is the most important barometer of the health of our market. If people feel good, they shop. Consumer confidence will slowly return as people get more comfortable with their personal outlook. Hope brings confidence and with the vaccine being rolled out (albeit poorly), a White House that promises to bring less chaos, and a better standing in the world, we will all start feeling better about our future.

Cheap money will help a little – last year this time, a 30 year fixed mortgage would cost you 3.72%. Today, they are more than a point lower, and they will stay within this range for the next twelve months. Historically, more borrowing power leads to more transactions, but this time around banks have tightened their restrictions and it’ll be more difficult to qualify for that bigger loan – so while you think you might be able to buy a bigger house for less money and a lower monthly payment, these tighter restrictions will put a slight damper on what otherwise would be a robust sales market.

Work from anywhere – if we learned anything last year it was that the majority of the workforce can work anywhere there is a 5G connection. I don’t know anyone who likes spending two hours a day on a train, bus, or on a subway commuting with strangers. If people have the option to continue to avoid the commute, they will. The only people I hear who are missing seeing people five days a week in the office are landlords with empty office space. Some companies will start requiring people to go back to the office arguing that they will be more productive. Some staff will want to be back in the office for the social environment – but everyone will prefer to have the option and the flexibility. Unless you’re in a service business (like real estate brokerage), more people will spend less time in the office and more time in remote places. Once travel opens up, people won’t be bound by their proximity to an office. People will work remotely in more exotic places – like the Bahamas or Costa Rica.

The slow rebirth of retail – as much as we like to believe that Amazon killed retail, retailers partly set the stage by being predictable and boring. Landlords are also to blame because they raised rents so high it became impossible for a small business to turn a profit. Unless you give people a reason to go into a store, they’d much rather sit on their ass and click. Consumers want experiences. Landlords will start to capitulate on unattainable rents and retailers will bring creativity back into the shopping experience. There is no other option.

Suburbs will lose their luster – some of the people who fled to the suburbs will be lured back to the city. There are many things our cities offer us that suburbs cannot. It may take awhile, but we will see the start of a trend back to our cities. Most people love what our cities offer as long as the cities are safe and affordable. New York and San Francisco will have to reckon with both of these factors, and they will.