Marketwatch April 24, 2020

ONE STEP FORWARD

Massive Behavioral Shifts have occurred these past four weeks. Some are considered temporary while others are imbedded in our psyche forever…how we shop, how we work, how we live, and how we enjoy life are all important ingredients to the human condition. However, as humans we HAVE to make changes along life’s way.

At the 30-35 day mark here are some of our takeaways.

RESIDENTIAL SECTOR

• While the spread of COVID-19 is still impacting the market, most sellers remain calm and hopeful according to the latest NAR survey.
• Sixty-one percent of landlords and 37 percent of Property Managers report no issues in collecting rents. Norton’s past due rentals amounted to only 4.5% on April 15 vs. a far cry from the 30% number of unpaid April rents circulating in the National press.
• There has been a decrease in buyer interest as consumers are mostly abiding by stay-in-shelter directors. NAR believes this is only temporary as we move into prime selling/buying season…May, June, July and August.
• Sellers have taken a calm approach with few new listings and even fewer price adjustments. The market has an inventory shortage, a small new construction sector which is largely unchanged by this blip.

ACREAGE

• The Coronavirus outbreak may drive American’s to choose life in rural areas over urban alternatives. With some of the most densely packed cities hit the hardest, it makes perfect sense when people literally live on top of each other, sharing the same subway and cabs constantly. Those areas with quality accessible health care, good schools, a sense of place and quick in-and-out access to the urban zones will see the greatest growth over the next ten years. People recognize the importance of SPACE DISTANCE AND ENVIRONMENT.

ACREAGE AND FARMS

• Many farmers are trying to send more food to grocery stores as commercial customers like hotels, schools, and restaurants cancel orders. But reworking the supply chain is a logistical nightmare even in a good economy. Some producers have nowhere to send supplies. Farmers have left veggies rotting in fields and have dumped millions of gallons of milk. The seafood industry is practically throwing fresh lobster at customers as fishery sales capsize as much as 95%. Looking ahead…the pandemic could accelerate direct-to-consumer sales of groceries, fresh meat, and other supplies. Farmers Markets like Jaemor Farms could help fill the gap.

OFFICE MARKET

• Boosting teleworking could help companies learn how to better utilize their brick-and-mortar office spaces. Most companies are bursting at the seams. Our job market has grown tremendously in the region, and even with sending people home to telework, companies have just been out of space and have no room for growth in the organizations.
• Any traditional face-to-face encounter – going to an accountant’s office, sending children to class, traveling for a business meeting – could someday seem less necessary as more remote options become publicly acceptable and widespread. It is amazing how slowly habits change, where people get stuck in the ruts of doing things, and then you have a shock like this that can change everything.
• Pre-pandemic, few companies allowed employees to telework daily, although staggering shifts so that some employees work from home on certain days could make better use of square footage. Teleworking won’t remove the need for an organization to have [physical] space. What is probably will do is create opportunities to save money, because you’d need less parking spaces, and buildings will need to build less parking spaces if companies focus on telework.

INDUSTRIAL

• Manufacturing is still the backbone of America. When President Trump asked the private sector to partner and re-invent themselves to manufacture more N-95 masks and ventilators, it was Honeywell, GM, Ford and Tesla that answered the call, not Pizza Hut, Ben & Jerry’s Ice Cream or even Google, for that matter.
• Manufacturers (especially American owned), especially pharmaceuticals and medical equipment related manufacturers, will be forced to moving facilities back to American soil to diversify their supply chain. We believe this will cause a boon in American manufacturing and new plant locations.

DEMOGRAPHIC

• Prior to the pandemic, our demographer showed that 62% of the household growth through 2025 was heading to the South (from Arizona through North Carolina), and we were expecting that to accelerate. We expect the migration shift to follow job availability and affordability, both of which are likely to continue to favor the South. The decennial census was supposed to take place April 1, 2020, and clearly was a mess. We are searching for other tools such as our U-Haul index, to help understand migration patterns and will bring those to you as we see them. The Pandemic has upended the 2020 Census, who knows what was counted and the LONG-TERM effects on politics and government funding.
• What we know is that real estate is one of three of mankind’s basic needs. Clothing, food and shelter. People need a place to live. When the quarantine is over and people feel safe, jobs are restored, our sense is that the marketplace will pick up where it left off based on the simple economic principle of supply and demand. Over the last 10 years there has been a continuous shortage of new construction. Some sources say there is a 4,500,000 national housing shortage so overall based on our population growth. Unlike prior housing recessions, the fundaments seem to be solid. 

WE ARE N THIS TOGETHER…

 NORTON NATIVE INTELLIGENCE