Shelter is a basic need.
Buying a home is prompted by a stage-of-life change.
Things are scary and uncertain right now. It feels like anything could happen, and much of it isn’t good. People, however, are always going to have certain basic needs and wants that must be addressed.
So, two things we can count on in the face of the coronavirus pandemic?
People will still need housing.
Most of us will continue to experience life changes.
Obviously, that’s not a clear nuts-and-bolts answer about how COVID-19 will impact things, but here’s what we’ve been able to glean from the research about the real estate market as a whole, and more specifically, here in Alaska.
Two Historical Crises and Their Impact on the Housing Market
Two of the most striking financial crises to hit Alaska in the last 50 years were the recession of the 1980s and the more recent 2008 financial crises. The ‘80s crises hit Alaska hard and lasted nearly a decade, while the economic downturn between 2007 and 2009 was a much shorter period to endure.
The Recession in the 1980s
Between 1980 and 1982, as the country experienced the residual effects of the late-’70s energy crisis, most of the US actually saw increases in overall housing prices. Unfortunately, that wasn’t true for Alaska.
With oil being nearly our only source of significant income during that period, by the end of the decade, more than 30,000 foreclosures had been filed, 14,000 of which remained empty, and even more Alaskans moved away from the state altogether.
Bad, bad, and more bad.
The 2008 Financial Crisis
The housing market across the US mirrored financial market struggles in the 2008 financial crisis, which led to plummeting house prices and marked increases in rental demand, which led to a shift in real estate revenue streams from home sales to rentals.
Furthermore, nearly as quickly as risky lending was publicly uncovered, regulations were tightened around homebuyer qualifications. Agents began suggesting more prequalification footwork be done up-front, so when clients found the right house, it was more of a sure thing.
Three Ways We Expect Your Alaska Real Estate Business to Change
Here’s how we see your real estate business changing over the next few months (or years, even):
Technology Becomes Even More Integrated into Your Business
Real estate agents have a greater number of tech tools at their disposal and more connectivity to buyers than ever before via digital methods. Thank goodness, because all the work you’ve (hopefully) done over the last couple of years to incorporate the latest in digital technology is going to come in handy.
We know our partners already have the best listing galleries available for viewing online because they understand the value of great real estate images. This is good, because in the immediate future (however long that ends up being!), social media, listing portals, and other digital means (think video conferencing) are the things that will keep you connected to your clients.
The bonus for you? Lots of buyers in Alaska come from out of state, and many don’t even set foot in properties before purchasing. So making your digital offerings as robust and engaging as possible isn’t just smart now, when no one is really doing things in person, but also into the future.
Rental Properties Might Become a More Valuable Revenue Stream
You may wind up expanding your business to encompass rental properties. If you already facilitate rentals, we see this channel widening.
The good news? We are happy to help develop amazing galleries for your rental properties, too!
You May End Up Servicing More Out-of-State Clients
We touched on this above, but since long-distance buyers are such a big market here, we imagine a few of our most forward-thinking partners might entertain focusing exclusively on those looking to jump ship in the lower 48 or other market segments, such as people wanting to go off-grid completely.
All in all, the planning our state has done to insulate Alaskans in a more significant way will give real estate agents a wider planning window. (That doesn’t mean you should treat right now like a break, though — use it to transition to more digital and virtual services!)
DMD Has Real Solutions for Your Real Estate Business Adjustments
Ultimately, this isn’t the first crisis humanity (or Alaska) has faced, and history proves that the housing market doesn’t ever completely disappear. The aspect of real estate likely to be most impacted will be how we do business — starting with how we reach our clients.
If you need help strategizing for your real estate business in the face of an economic downturn, DMD Real Estate Photography has a number of solutions to support an expansion of your digital presence and services. Reach out!