4 Ways the Delta Variant Has Impacted California's Real Estate Industry
While the golden state is just as gorgeous of a setting to live in as ever, it’s a different market when compared to the landscape just a few short years ago. The surge of the Delta variant of COVID has affected industries across the country yet again and in California specifically, the real estate world has been rattled.
We all want to live in a place where we are both safe and happy, and this certainly still can be attained in California. This Delta variant is a disconcerting reality but there are still plenty of
reasons for cautious optimism. There lies a unique opportunity to find an ideal home under these unprecedented conditions.
One aspect that has remained steady however is the necessity of a Natural Hazard Disclosure, often referred to as a NHD Report for short. Due to the variety and severity of potential disasters, California is the only state where a NHD report is required to be provided during the sale of a house. When considering a home, there’s simply no single better source of information about its safety than a NHD report.
Reading the NHD report thoroughly gives buyers peace of mind as once you are aware of the inherent risks of a home, you can then consider how other factors such as the Delta variant surge might affect your decision to purchase a property.
1) Housing and Material Shortage
International supply chains have been slowed since the pandemic began, and the rise of the Delta variant has once again put a strain upon the international supply chain.
This has created a shortage of everything from electronics from Asia to lumber used for construction. The latter affects the housing market in particular as the cost of wood right now is up a brutal 288 percent due to production being halted during last year’s lockdowns.
This makes anything from simple repairs to structural overhaul a far more costly undertaking for homeowners. So if your NHD report reveals that you need to replace or reinforce an area of a home to make it safe, you are now going to pay three times as much as you would have years ago.
The surge of the delta variant has unsettled the market, which prompts most to hold on to what they have in terms of housing. There is not an abundance of availability in California currently, except in some specific urban areas. The trends reflect this as the average California home cost is up 21.2 percent when compared to last year.
The possible silver line here is although the initial price tag might be at a premium, the average mortgage rate has settled below the market norm.
2) Lower Mortgage Rates
Right now mortgage rates in California are hovering around 3.8 percent, which is under the norm when compared to the past ten years for the immensely popular state.
So while the overall cost of a Californian dream home might be up, the monthly payment itself currently sits at an agreeable rate. This also means it is an ideal time for those who already own a home and to consider refinancing.
To those who have the means to purchase a property, now is a better than average time to lock in a rate. The Delta variant is a major contributing factor to these rates being lower than average, and if lockdowns are to return experts predict yet another dive in the interest and mortgage rates.
When the Delta variant subsides experts predict the market to settle back down, which means the mortgage rates will likely rise again and eventually settle back to normal levels.
It’s tempting to move quickly to secure such slow rates but performing due diligence with regards to NHD reports still matters just as much as ever.
3) The Risks of Rural Areas
When considering the market, it’s clear that rural areas are less affected than urban areas by the pandemic and more desirable overall. The Delta variant spreads more quickly than the original virus but still poses the most serious risk in densely packed cities.
Moving out of the hotbed of bigger cities to the countryside has been a popular move, as one can spend far less financially, enjoy a larger space and keep a distance from the areas most affected by the Delta strain.
The risk however is that these homes might be older, and a buyer in a new area might be unaware of the year-long issues of the home and the area as a whole. In rural locations, the homes might not have the same regular inspection rate or regulations, which is why when considering such a move the NHD report is even more essential.
Trading the risk of the Delta variant for natural disaster risk is not an improvement, but this can be mitigated by thoroughly reading and understanding the Natural Hazard Disclosure for each potential location
It’s understandable to want to move quickly to somewhere safe during a pandemic, but doing so in a methodical manner ensures you and your family are guarded against both the virus and natural disasters alike.
4) A New Criteria
An entirely new angle on the Californian real estate game is the emergence of vaccination rates being a now factor to weigh when considering a home.
While these won’t be listed on any Natural Hazard Disclosure report, the vaccination rate is something many consider when evaluating an area to potentially live, as it directly correlates to how likely the city and county are to go back into lockdown or quarantine.
There are tools available online now that you can use to see what the current transmission and vaccination rate is for each county in California. For those looking to move somewhere with open amenities, the vaccination rate is something to consider that would have been unheard of just a few short years ago.
The vaccination rate, when taken in conjunction with a NHD report, gives potential home buyers the best possible information to decide if the home and area meet their safety needs. It sounds strange to some that this is now the case, but it’s become just as relevant as flooding or wildfire risk to know when evaluating an area.
California will continue to be one of the most desirable places in the country to live as it offers so much in terms of natural beauty and diversity. The Delta variant has impacted the industry undoubtedly, but eventually, it will settle into being just another factor to weigh when considering a real-estate purchase.