The consequences of the coronavirus pandemic for real estate have not surprised so far, even if some sector leaders are complaining, says David Hodes, managing partner at capital advisory firm Hodes Weill & Associates.
The current financial crisis resulting from a global economic shutdown in the face of covid-19 is unlike anything any of us have experienced.
Compressed into a little more than a month, we have seen a calamitous rise in unemployment as economic activity across the globe ground to a halt. Countries are shut down. Other than healthcare workers and other service providers working tirelessly to keep our communities safe, most work from home – if still employed. It took six weeks for unemployment to rise in the US from a more than 50 year low of 3.5 percent to more than 10 percent at time of writing.
It has been well chronicled that real estate did not cause this financial crisis. In fact, the real estate market entered this crisis in good shape, with supply and demand in relative balance – at least based on pre-covid demand – and enough global economic growth to maintain leasing momentum. There were some problems in retail and in a few condominium and hotel markets, but generally speaking, conditions were relatively benign and liquidity was ample.
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