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Real estate in the United States, what is the influence of Covid-19 on U.S. real estate investments.
Thibaut Gueant President of Invest US gives us his vision of the Real Estate Market in Cleveland in the face of the Covid-19 pandemic. Impact of the Covid-19 on investments in Cleveland. And more generally in the U.S. market.
Let’s take the numbers of unemployed in the United States. At the beginning of 2020. The unemployment rate has reached a level not seen since the early 1970s. The measure in February 2020 was estimated at less than 3.6%. The same measure in April showed an increase of 11.2 points. Essentially related to the closure of some businesses to protect employees from the epidemic. The curve reversed to a lower level and June saw a 3.6-point decline in June. The authorities expect the rate to return to less than 10% during the month of August. The majority of these layoffs remain temporary. As soon as the companies reopen, jobs will be reactivated.
Exceptional aid measures.
Billions of dollars have been released by the U.S. government to curb the impact of the Covid-19. Anyone whose employment is stopped by the virus receives $2,400 a month in assistance. This assistance began in March and was extended until July. It is likely to continue until the end of 2020. In addition, each family with an up-to-date contribution receives a cheque for $1,500. Matched with a second cheque of $500 per child in May. A second identical aid is planned for this month of August.
Impact on the real estate market.
From February to April 2020, the residential market remained stable and experienced exceptional dynamism. May is up nearly 45% compared to April. Several explanations for this increase in the number of transactions. Very low interest rates. More than 30% of the request for additional funding in July 2020 compared to July 2019.
Containment.
Americans want space. Containment has created a demand for space and a demand for gardening among Americans. In addition, many needed to create a workspace at home. Homes with gardens on the outskirts of the city are preferred. The increase in the sale price of houses is expected to continue over the next two years.
Investors.
Residential investment is now preferred over commercial investment. Commercial real estate or office real estate no longer has the coast. Many unpaid rents as a result of the closure. Investors are turning to residential real estate, which remains a safe haven. In addition, stock or financial markets do not show impeccable health. Investors are now focusing their purchases on safer and more profitable rental real estate than stock market transactions.
The choice of security.
Residential real estate remains the only safe bet. Profits made in both profitability and capital gains. Trade can be done remotely, telecommuting is growing, real estate remains. The need for housing cannot be replaced by a “telehousing” rental property ensures its stability and the growth of demand does not weaken.
