REAL ESTATE CHALLENGES FACING THE NEW NORMAL.

 

One the consequences of the ongoing health crisis is that all economic sectors are reviewing their processes and protocols to adapt themselves to the new challenges of the “new normal.” The real estate market isn’t an exception, so we’re presenting you the opinion of some experts about the current situation and their expectations for the future to come.

 

María José Fernández, General Director of the Association of Real Estate Developers (ADI for its initials in Spanish), considers that one of the main challenges facing the “new normal” is the lack of trust in real estate investments and purchases.

 

“This crisis is another factor weighing in a market shortage that started in 2018. The market is going through a very complicated moment and one of the most important things to do is to start generating trust in investors, both national and foreign, to perceive Mexico as country with juridic certainty in real estate” claimed the ADI director. She also said that “we need to work shoulder to shoulder with the government to assure buyers that the projects they decide to invest in, often getting themselves into debts lasting up to 20 years, will be built and that permissions will be granted to new constructions.

 

In Mexican cities such as Ciudad de México, Toluca, Querétaro, Puebla, Guanajuato, Guadalajara, Zapopan, Zacatecas, Durango, Gómez Palacio, Torreón, Saltillo, Monterrey, Chihuahua, Tampico, Tijuana, Mexicali, Hermosillo, Obregón, Los Mochis, Culiacán, Mazatlán and Tepic this reassurance exists due to the numerous projects developing right now to transform the urban landscape.

 

Javier Romero, spokesperson of a well-known real estate website, remarked that there are other factors stopping people from buying such as inflation, which will continue to affect prices due to the losing value of the Mexican peso in the international market. Some of the effects of inflation in real estate are related to the prices of construction materials, usually priced in dollars, and the narrowing of the offer in new developments might be taken a sign of a bigger crisis.

 

Romero, however, believes that there are other situations that are accelerating real estate investments: “Rates will continue to get lower as soon as the effect of the economic crisis are still palpable. So, for a few years the valuation will continue this low trend or will be the same, but it will hardly increase, and it will take a long time to have a valuation over 7% back. This opens a new possibility for those who want to make an import purchase such as a home.”

 

Adding to this conversation, Sergio Felgueres, another real estate expert, remarked that there are a lot of starting points to achieve a recovery for the housing market because there have been improvements in mortgage credits: now they have lower rates, in pesos, and more flexibility than before.

 

However, he also recognized that these credits are not easy to get for most people. Felgeres predicts that it will be harder for informal workers to get access to mortgage credits due to the unemployment wave and insecurity originated from the temporal close of numerous economic activities: “We have to figure out a solution because people going back to work is beneficial for everyone.” He finally said that: “there are people waiting for the post COVID-19 phase, but we are already there. We are not waiting for the future anymore. We’re building it now with strategies and actions from real estate companies.” 

 

There isn’t any doubt that the real estate market has been one of the most affected by the health crisis. However, these specialists agree that it also has a lot of advantages that it will make it arise in the medium-long term because it’s one of the most important market to improve Mexico’s economy.

 

Keywords: changes real estate COVID-19, future for the real estate market in the new normal, challenges of the new normal.