Can the Coronavirus pandemic affect the real estate markets, especially in the United States and Canada?
This is the question I am frequently asked these days. The short answer is yes, it can. Indeed, I expect it to affect the North America and even Europe real estate markets very badly.
You know that price or value is determined based on supply and demand in all markets. When demand is higher than supply, price goes up, and visa versa.
For example, when there are 1000 buyers, and only 100 properties for sale in the same real estate market, then the price goes up because buyers will have to compete with each other and pay more to make the sellers sell their properties to them. On the other hand, sellers will take this opportunity to sell their properties with a higher price. So the price will go higher and higher.
Conversely, when there are 100 buyers and 1000 for sale properties, it is the sellers who have to lower the prices to make the buyers buy. Therefore, the average price will go lower in that real estate market.
How Will Coronavirus Pandemic Affect the Real Estate Markets?
Coronavirus Pandemic shouldn’t be able to affect the real estate markets, under the normal conditions. It could have a temporary impact, just because businesses are closed, and dealings are stopped. But once the pandemic is controlled and people are back to work, buying and selling should be back to normal too, and so the real estate markets’ prices should start following the same route they have been following before the Coronavirus Pandemic.
However, this is not going to happen in my opinion, because the world is not under the normal conditions, not because of the pandemic, but because of what people have in their minds against a special country.
It is not just the Coronavirus Pandemic which has currently created an unusual condition. There is another factor in this disaster which can affect so many things, including the real estate markets around the world, specially in North America: China!
Unfortunately, China is involved in this Coronavirus Pandemic, in a different way. The pandemic was initiated from this country, and the origin of Coronavirus is from there. Although molecular genetics researches have proven that the COVID-19 virus has definitely been developed naturally, and not by human’s intentional manipulation and intervention, which means there was no biological attack at all, people of the other countries of the world are so mad at China and the Chinese people, and this can affect the world, the markets, economy, etc., in several different good and bad ways.
As this article is about the real estate market, I will try to focus on this topic for now, but it is possible that I publish some other articles and talk about the other aspects of humans’ lives that will be impacted by the Coronavirus ongoing pandemic.
So here is what will happen:
The more people are dying because of Coronavirus, and the more people are losing money because of the pandemic which is becoming longer and longer, the more hate will form against China and the Chinese people, because unfortunately, people of the world are thinking that this disaster was established and founded by China, and it was the Chinese who scattered the virus around the world.
Whether this sentiment is correct or not, by no means those people who have lost their beloved ones and their businesses and jobs can be convinced that the Coronavirus Pandemic was done by nature, and no country or nation has any intention in it. They are extremely angry, and so they can’t control their emotions.
Something that does matter is that there are millions of the Chinese, living around the world, especially in North America. They have real estate properties. If this hatred which is getting worse every day causes them to sell their properties to leave to China, the supply will dramatically become much larger than demand, and so the real estate markets will crash. This can be more disastrous and potent in the real estate markets like Toronto which has been going up constantly during the past several years:
This is a bad news for those who have recently bought properties and are paying mortgage. If this market crash happens, they will have to default paying their mortgages, and they will face foreclosure.
It is a good news for those who always wanted to buy a place, but they never had enough money to do so. They can wait for the price to hit the bottom. Then they can make their purchases. The market will recover and the prices will start going up again. However, it can take a long time for this to happen.
How Likely Is This to Happen?
As I explained above, it depends on the people’s behavior and sentiment against the Chinese. Unfortunately, people are so upset and it looks too hard to change their mentality, at least for now. The fact that the Coronavirus has been appeared from China, even naturally and without any intention, is enough to make some people mad at the Chinese, especially when they lose a beloved one, or their businesses and income. Who can convince them that it is proven that the COVID-19 virus was developed in nature, like all the other viruses and germs, and this could be originated from any country?
It is too hard to make them believe so.
Therefore, this developing hatred can affect so many things around the world, including the Chinese people, and the real estate markets.
Even once the Coronavirus name was heard from the news, and when it was still limited to China and Wuhan, and people of the other countries of the world didn’t even imagine that the virus would spread the whole world, the Corona beer sale dropped for 30%, just because of the name “Corona” which had nothing to do with Coronavirus. The company finally stopped producing the Corona beer, just because of a name that was on the boxes and bottles.
It is the same with the people’s thoughts against the Chinese. Nobody can change their minds, at least for now.
Once I heard about the Corona beer sale that was down for 30%, although I had never bought it before, but I bought a box just (1) to support the company and their employees and workers, and (2) to tell people that Corona beer had nothing to do with Coronavirus.
I recorded a video and explained this. But some people attacked me even without watching the video and just by judging it by its title. They yelled that how I could make jokes with that, whereas it wasn’t a joke. I was just trying to support the company and make people understand that this was stupid to avoid buying the Corona beer because of Coronavirus. They made me remember this Einstein’s quote:
“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.” — Albert Einstein
Please watch the video:
Whether Coronavirus was intentionally or unintentionally spread by China to damage the other countries economy, or to take the control of the world, I am sure it will affect the China’s economy more than the other countries in long-term, because it taught the world some big lessons that will prevent them from being dependent to China’s industries anymore. China will lose its influence in the world’s economy. Countries will avoid ordering products to China, and will develop their own industries, which is good and fair for their own people.
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