How the pandemic positively affected the housing real estate market - Business Insider

The pandemic will likely have a positive impact on housing sales, but not rentals and commercial real estate.Residential sales will experience a massive lift during the pandemic, according to Charles Nathanson, an associate professor of finance at the Kellogg School of Management.

Whether it's tech workers abandoning dense urban cores for more space in the countryside, restaurateurs converting from dine-in to takeout, or companies suddenly going virtual while locked into an office lease, it's clear that the ways we are using space — and the amount we're willing to pay for it — are changing.

"There is a substitution effect, where all of a sudden people want way more residential space than they wanted six months ago," Nathanson said. "So that's why I think of why we may have situations where we see big house-price increases, even as a lot of people are losing their jobs." Given the combination of higher demand and tighter inventory, Nathanson predicts that the residential housing market is likely to see prices continue to rise — and unlikely to experience the volatility of 2008–2010.

"We might see a lot of commercial property turning into residential housing. You already see it in those old factories that got turned into loft apartments. But you would just see way, way more of that."He notes that an uptick in move-outs and evictions, if owners can't find renters to replace them, could put stress on the residential real estate markets.

"In commercial real estate, there are all these long-term financial obligations that are based on the assumption that the demand would continue, which… it just fell off a cliff this spring," Nathanson said. "So now it's a question of who's going to take the loss."

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