We are releasing a national survey of 569 U.S. real estate investors — first-of-its-kind research into how they believe COVID-19 will impact the U.S. economy, housing markets, and mortgage credit. Click here to download the survey findings in their entirety.
Real estate investors believe COVID-19 will have a very significant but temporary impact on economic growth. According to 80% of respondents, the U.S. economy was experiencing strong or moderate growth six months ago. 18% believe the U.S. is now in a depression. 76% expect the economy will be recovering or growing in 12 months.
Relative to the 2009 recession, known as the U.S. housing crisis, our survey finds half of real estate investors believe the economic impact of COVID-19 will be more severe for the U.S. national economy. In contrast, 43% believe the economic impact of COVID-19 will be less severe in the markets where they invest, and only 29% think it will be more severe in those markets.
The survey found three quarters of real estate investors expect COVID-19 will cause home prices to decline, but the magnitude will be less severe than during the U.S. housing crisis. A majority expect home prices will decline up to 20% because of COVID-19.
COVID-19 has suddenly weakened real estate markets where survey respondents invest. 85% of respondents believe demand in markets where they invest was strong six months ago. Since the onset of COVID-19, only one quarter believe those markets remain strong, and only one third expect those markets will be strong in six months.
As the economic impact of COVID-19 plays out, nearly three quarters of real estate investors expect foreclosures will increase. Their views reflect the increase in unemployment, number of mortgage forbearances, and belief that not all borrowers will be able to afford home ownership.
Slightly less than half of respondents expect real estate investors to lose money. We attribute these expectations to property construction and value-add investment taking longer to complete and to stabilized properties losing income when tenants do not pay their rent on time.
Approximately half of our survey respondents expect it will be a good time to buy properties over the next six months with about as many planning to increase their investment in real estate over the time period.
Consistent with expecting markets to weaken and viewing the next six months as a good time to buy, a majority of real estate investors expect supply to increase across online realtor listings, off market channels, short sales, foreclosures, and distressed-property auction websites.
The survey finds real estate investors are not confident about being able to arrange financing. 38% believe it will be harder to get a loan, and 32% don’t know if it will be easier or harder. We attribute this to commercial lenders pulling back, credit tightening, and concerns about value add investments taking longer to complete and tenants not paying rent on time.
Our survey respondents are entrepreneurs who fix and flip properties, own rentals, and pursue other strategies to make money from investing in real estate. From firsthand experience, we know real estate investors can be a leading indicator of secular trends and abrupt change that shape the American economy. We hope the information we report is useful to all stakeholders in the U.S. housing market.
The survey was conducted online from April 20–24. Survey respondents represent all regions of the U.S.