Post Pandemic Vacation Property Downturn

In true TI form, lets talk profting from the pandemic, in real estate.

What are people's thoughts on a post pandemic vacation property downturn in the Eastern Sierras?  Timeline?  Depth or non-existant? 

Will the work from home stick?  I know a several tech companies have done it, IBM has been doing it for 20 years.  Workers are IBM loved  that knew how to work it with the trade off of you're just a spreadsheet number and even more disposable.  Everyone is an offshore 1099.

My post-COVID prediction:

1)  Remote working will stay but will not take over as previously predicted.  I think about 30 to 40% of the workforce can work from home well while the rest need an office environment.  I think there may be a lot of flex scheduling with people working 2 to 3 days from home and rest at work. 

All this talk of companies (especially tech companies) going full remote is unrealistic.  There is a lot benefits to having people in the same building and exchanging ideas/problems/solution in an informal setting.  That really does not work when the work staff is separate.

2)  Commercial property values will plummet for a number of reasons...business will realize that they don't need all of the office space that they have with 50% of the staff working remotely.  Small businesses/retail will be last to recover from this pandemic.  I hope to see a lot of SBA loans and direct infusion for businesses by the Biden Administration.

3)  Leisure and travel should boon in the second half of 2021 with a lot of pent up demand.

4)  Biggest fear is the longterm effects of the K shape recovery we are having.  The bottom 20 to 25% have taken the brunt of the this pandemic and they are desperate for relief.

5)  I would say 20 to 25% chance of another mass RE defaults and foreclosures...it will be interesting to see what happens with banks and foreclosures.

Won't some of these vacation properties just convert to long term rentals?


Re: 5) Banks and foreclosures....

With the wide majority of homeowners on 30 fixed loans or shorter, qualifying at 43% DTI - near equal to comparable rent in many cases - the odds of a foreclosure wave are comparatively thin. Add to this the huge "anti-foreclosure" mood in D.C. - forbearances for example - there shouldn't be a 2009-20011 style jingle mail event. There will always be foreclosures and there could be an increase, but will these homes ever be put back on the general market or will they be absorbed in bulk by larger investor hedge funds?

My guess it will be the larger retail and commercial market collapse - coupled with the dominance of the consumer by Amazon -  that will do more damage to the economy in 2021. Mom and Pop stores having a tough go of it with foot traffic down so low and delivery options don't pay the bills. If a restaurant survives the pandemic, only to find itself the only business left in a 99% vacant strip mall, how strong are the odds it will live on to survive again when forced to relocate out of a derelict property?

Any business that can make it through to June/July 2021 should continue to do well. Between now and then it's got to be an extraordinarily tough time for the rest of these small businesses.

My .02c

I will say it again. Before the pandemic there were many business that were not doing so well.
Major factors that hurt business: Due to the Internet people are able to shop for the best prices, high rent, change in demand, business cost rise such as labor and cogs/food.


Before there was a demand for Betamax recorder industry. But things changed and people no longer use Betamax. (Things constantly change)

Am I ever going to a movie theater in the future? Probably not.

It's been a K-shaped recovery (those with assets/means are doing better, those without are doing worse). The Fed continues to devalue the dollar so asset prices will increase. Own real estate, stocks, crypto, precious metals, pokemon cards and you will fare well (and you already have). Own nothing? Then find a way to produce income and procure some assets.

Not everyone can be 100% remote but there is no denying the shift in the acceptance of remote work is permanent. Many office jobs can be done remotely even after this crisis has abated. I don't ever want to be forced to work in an office again. Sure, some people like hanging out at the water cooler but I hang out at TI for that. 

More people being able to 100% remote work will increase demand for homes in vacation areas. Many people are leaving cities (SF and NY are the big examples) to move to places with a lower cost of living and a higher quality of life.

zovall said:

It's been a K-shaped recovery (those with assets/means are doing better, those without are doing worse). The Fed continues to devalue the dollar so asset prices will increase. Own real estate, stocks, crypto, precious metals, pokemon cards and you will fare well (and you already have). Own nothing? Then find a way to produce income and procure some assets.

Not everyone can be 100% remote but there is no denying this shift the acceptance of remote work is permanent. Many office jobs can be done remotely even after this crisis has abated. I don't ever want to be forced to work in an office again. Sure, some people like hanging out at the water cooler but I hang out at TI for that. 

More people being able to 100% remote work will increase demand for homes in vacation areas. Many people are leaving cities (SF and NY are the big examples) to move to places with a lower cost of living and a higher quality of life.

Click to expand...

Office buildings and retail properties valuations may go lower. Which banks may be affected due to loans. It is all over the news and articles that people and business are not paying rent or negotiated lower rent.

Even with a vaccine. I will not go to conferences.