This, Too, Shall Pass
Volume XVIII, Issue 15
Real estate life is on hold. Real estate agencies are closed, owners are not placing their properties on the market for sale, buyers aren’t visiting properties currently on the market, rental apartments are vacant or their leases are being extended…all in the name of Covid-19. It’s a crazy world we live in; not one that we ever imagined. But, we’re not dead yet. We haven’t had lobotomies, either, and in my view, life will come back…if not to “normal,” then a new “normal.”
I listen to the doomsayers who predict serious economic woes as a result of the pandemic. Yesterday I watched a Webinar presented by Moneycorp, that while it was very U.K.-centric, still reminded us of the plusses and minuses of the pandemic’s economic situation and how it will adversely (or not) affect our future. If we look back at the 2008-2009 financial crisis and how our economies bounced back, you’ll see that it happened relatively quickly. That doesn’t mean the same will happen after this — this is completely different, but the webinar speaker, Vicky Pryce, concluded with the plusses and minuses that all depend on how we deal with the crisis.
I’m an optimist that believes collectively we know how to make lemonade out of lemons. I’m watching how our creative and innovative thinking has overcome confinement to unite people in virtual ways. Just yesterday, I attended a family member’s funeral that took place in New Orleans on a Zoom.us meeting. There were dozens of people who attended, virtually from all over the world, while only a handful was at the cemetery. That was a first for me, and while I hope it is the last, it illustrates how we can think outside the proverbial box to make the best out of a bad situation. And so it could be with the economy.
But understand, I’m no economist. I don’t read the numbers and live by their messages, but I do study human behavior that the numbers don’t reflect. What I see is that there are a whole lot of people out there who had plans to move to France or buy a property here. Their plans were thwarted by the Covid-19 pandemic and they are becoming frustrated. The moment they are released from confinement, even with some trepidation, these people who will have waited months to realize their dreams will be more than anxious to get on with their lives. Some will have lost money in the market — money earmarked for their investment in France, but that won’t be lost forever, either.
My mother had a mantra: “This, too, shall pass.” She lived to the ripe old age of 98 and saw an awful lot of highs and lows during her lifetime. When Hurricane Katrina flooded New Orleans devastating the city, she said, “Yech, I’ve seen worse!” And I’m sure she had. It took years for New Orleans to recover, but it has, if not 100 percent, at least close, with even more to build a better future.
These are my own predictions as I gaze into my crystal ball, based on what I’ve seen in the past and what I know about the market. Paris and France will recover. Property in France will go through an unstable period, but it will level out and find its sure footing. When the city of Paris discovers the large numbers of vacant properties that could be filled by transient tenants, perhaps it will loosen its strict anti-short-term rental laws to allow landlords to recover their revenues and support their properties with those earnings. Maybe the government will want to encourage property transactions by lowering their taxes on transactions. Maybe the banks will be incentivized to renegotiate mortgages at better rates to enable people to fulfill their obligations easier. And so on and so forth…ideas will come flowing out of the negative aspects to create a positive result.
In an article in Les Echos in late March, Elsa Dicharry wrote, That the real estate industry had a great start in 2020 and that has come to a halt during the pandemic. By March 15th, 10,000 agencies belonging to FNAIM (La Fédération Nationale de l’Immobilier) closed tight. They’re still working, but landlords and tenants are having to work on their own without “crossing paths” in the apartments. Still, the French are increasingly aspiring to become owners, and because they do, the deadlines are being extended to obtain their loan or their signatures on the deed.
Electronic signatures can now be organized by the Notaires in order to move forward despite confinement measures. Orpi, with 1,300 agencies, is handling calls and e-mails and continues to provide imperative visits for customers who are in urgent need of accommodation but with no more than one person per visit. The visits are only carried out by voluntary employees who have been well trained in proper social distancing.
Virtual tours are also being organized on certain networks. Some experts say “No one will buy a house or an apartment without having visited it,” but I know this not to be true, particularly for foreign buyers. We’ve handled many transactions for clients “sight unseen!” And agents are taking advantage of this period to do things they didn’t have time to do in normal times…such as updating their files, organizing training, etc. A Century 21 official equated it to the image of a fisherman who is docked during the storm and takes the time to repair his boat. We are doing what we can today to build for tomorrow.
It’s too early for the professionals to predict specifically how the future will look, but there’s no doubt 2020 will have far fewer transactions than 2019, where the ceiling was broken with more than 1 million sales! But the market is resilient and fueled by strong demand, therefore the community is confident. We are reminded that in 2008, there was a sharp drop in the number of transactions, but there was only a small drop in prices after twelve years of strong growth and then it bounced back quickly and with a vengeance. At the time, the banks had largely tightened their credit conditions, but this time, real estate professionals believe that the scenario will be different.
And I agree, particularly for our specific market — North American ex-pats looking for a new life and a foothold in France. They will come back with a vengeance, too…mark my words, this, too, shall pass, maybe even faster than anyone believes.
P.S. Just a couple of weeks ago, USA Today gave House Hunters International a Grade: A+: “House Hunters International is pinnacle TV viewing and hands-down the best HGTV show. The perfect mix of fabulous real estate agents (LOOKING AT YOU LADY IN PARIS AND DUDE IN ENGLAND), enough scenic beauty to indulge wanderlust, and compelling, but sometimes enraging home buyers. Not only can you get a glimpse of the rental market in foreign countries, but you can also sit back and judge every single American moving to Europe and complaining about how small everything is. Truly, it’s a gift.” (See ftw.usatoday.com/2020/03/ By Hemal Jhaveri from March 21, 2020)