Why now might be the perfect time to move
We’re living through strange times. This pandemic is utterly uprooting our conventional ways of life and forcing all of us to rethink what we do.
For many of us, it means profound changes. But that isn’t necessarily a bad thing. Almost always, change means opportunity – a chance to take advantage of the disruptions in daily life and move beyond the status quo. Disruption jolts us out of our regular patterns and allows us to find something new.
Right now, this is true in virtually all areas of life. But it is particularly relevant in the housing market. The changing nature of work will disrupt property in a way that hasn’t been seen for well over a hundred years, and perhaps ever.
The reasons for this come down to the changing nature of work. People no longer have to travel to the office. Instead, they’re working on their laptops in their home offices, doing work over the cloud.
This setup is fundamentally different from what came before. The imperative in 2019 was to live close to major centers of work. Now it is to live near to a decent internet connection. And the two don’t necessarily coincide.
Look at a map of property prices anywhere, and you’ll soon discover something: housing closest to places of work and transport links costs more than elsewhere. The reason for this comes down to convenience. People, in general, don’t want to spend hours of their day commuting. Given a choice, they’d live as close to their places of work as possible.
Of course, everyone wants the same thing. Workers would always like to live in the most beautiful areas, closest to their city-center offices. And that pushes up the price of housing. More competition for a limited supply of residential units increases rents and values, pricing some people out of the market.
The pandemic, though, is changing all that. With around half of people working from home, it doesn’t make sense to pay vast sums of money to live close to the city center. Companies are closing offices and refusing to renew their leases. And there is a good chance that many of them will never come back, choosing to work online instead.
This change represents a seismic shift in the housing market. Now there’s no reason for people to pay a premium for living in city centers. In fact, it could be a dangerous thing, giving that COVID-19 seems to spread faster where the population is denser.
The obvious outcome is a massive shift in the pattern of house prices across the country. Get rid of the commute, and all of a sudden, location isn’t as important as it once was. Yes, people still want to be near their friends and amenities, but because they no longer have to travel daily into the office, there is no justification for living close to the town center. It’s not worth the premium.
At the same time, we’re likely to see an influx of wealth into areas with cheap housing, far from traditional economic hubs. Areas that were once backwaters now become ripe for new homeowners to find cheap housing, so long as they have a good internet connection. And that’s going to push up the prices as competition heats up.
Opportunities about – why now might be the perfect time to move
Nobody knows precisely how the current situation is going to play out. But if there is a decisive move towards working from home, then we can expect a radical shift in house prices across the board.
Remember, though; it is still early days. Traditional valuations remain intact for now. However, that might not prevail in the long-term, meaning that timing your selling could be significant.
Let’s think about what this might look like in practice. Let’s say that you have a property in a downtown area containing a lot of office-based businesses. Before the crisis, your accommodation had a high value because it was close to transport links and places of work. Living there allowed you to cut your commute time and achieve a higher quality of life.
Now, though, the offices are shut, and people are wondering what’s going to happen in the future. Will businesses continue paying high rates to locate in the center of town? Or will they take this opportunity to close their offices for good and move their enterprises online?
If it is the latter, then you can expect the value of your property to fall. And that’s a good reason for selling right now. If you sell now, you can cash in the full value of your property and take advantage of low prices elsewhere in the country. You’re selling high and buying low – precisely what you want.
Now imagine that you wait to move. If the above situation plays out as predicted, then the value of your currently middle-of-town property will fall, and the price of those in the economic backwaters will rise. As such, your entire net worth will fall, and you’ll end up becoming much poorer.
Uncertainties of the current situation
The current situation is uncertain, and we don’t know how precisely it will turn out. However, if your company is already working from home, that’s a good sign that you should get a housing loan. If you’re getting the sense that the office isn’t going to reopen any time soon, it’s probably time to seriously think about how you might benefit from the present situation.
As with any financial move in life, there are risks. By 2022, everything could be back to normal, and the old working patterns will restore themselves. But on the other hand, it might not be. It seems hard to imagine returning to normality, given the savings that working from home delivers both businesses and individuals.
In general, people want to work from home. And now that managers have seen that it is possible, they will factor into their decision making. The housing market could be about to change in ways that few predicted before the virus hit.
Photo by Matt Seymour