With the global economic slowdown and an abundance of uncertainty surrounding when the virus will be contained, appraisers, real estate agents, and construction professionals have had to make some difficult decisions in order to remain competitive and keep their businesses afloat. As a result, the effects of the pandemic on these sectors of the economy are likely to be long-lasting.
One of the most significant impacts the coronavirus has had on the real estate and construction industries is the decreased number of appraisers available to assess property values. To mitigate the spread of the virus, governments around the world have imposed restrictions on travel that have had a direct impact on the ability of appraisers to access properties for assessment. Additionally, many appraisers have begun to observe social distancing guidelines, further reducing their capacity to conduct appraisals. The result is a decrease in the availability of appraisers, which has caused appraisal rates to increase significantly in order to account for additional safety measures taken by appraisers and the extra time required for each appraisal.
The shortage of appraisers has been compounded by the fact that, due to the economic slowdown, fewer people are in the market for homes. With fewer buyers, there is a decrease in demand for appraisals, leading to fewer assignments. This, in turn, has caused the cost of an appraisal to skyrocket because appraisers are no longer able to rely on a steady flow of business to sustain their livelihoods and must charge more for their services in order to cover their costs.
The decrease in demand for appraisals has had a knock-on effect on the real estate industry, as it has made it more difficult for potential buyers to secure mortgages. Without an appraisal, lenders are unable to assess the value of a property and are thus less willing to offer loans to buyers. This has created an environment in which few people are buying or selling homes, thus decreasing the activity level in the real estate market.
For the construction industry, the health crisis has resulted in supply chain disruptions due to difficulties in obtaining raw materials, increased operating costs, and a decrease in demand for new construction projects. With the implementation of business closures, social distancing regulations, and travel restrictions, the process of obtaining materials has become much more difficult since suppliers are now unable to source materials from overseas. This has caused a significant rise in construction prices due to the additional time and money required to obtain materials locally. Furthermore, as fewer people are buying homes, there is a decreased demand for new construction projects, further reducing the profits made by construction companies.
In conclusion, the coronavirus pandemic has caused significant disruption to the real estate and construction markets. Due to a decrease in the availability of appraisers, an economic slowdown, and various other factors, both residential and commercial appraisals have become more expensive and time-consuming. Moreover, due to the lack of appraisals, fewer people are able to secure mortgages, thus leading to a decrease in the activity level in the real estate market. Finally, construction companies have had to deal with supply chain disruptions, increased operating costs, and a decrease in demand for new projects, thus impacting their bottom line. As a result, it is likely that the effects of the pandemic on the real estate and construction industries will be long-lasting.
This article was contributed on Aug 12, 2023
