The flow of people between and within countries has always been a critical driver of real estate and the economy.
CHICAGO (PRWEB) August 04, 2020
Reduced migration amid COVID-19 behavioral changes continues to impact real estate and the world’s economies as people face unprecedented challenges to mobility, according to a report from The Counselors of Real Estate.
“The flow of people between and within countries has always been a critical driver of real estate and the economy as demand increases where population flows,” said Michel Couillard, CRE, 2020 chair of The Counselors of Real Estate. “For those areas receiving migrants, the demand for housing, goods, services, and infrastructure expands, increasing both immigrant and non-immigrant jobs and economic growth. Countries and states that lose population can suffer economic decline and crippling near and longer-term pension and budget problems.”
From flows of approximately 270 million in 2019, immigration has essentially ground to a halt, initially driven by nationalistic policies in the U.S. and countries throughout the world and more recently by the pandemic. Universities and companies reliant on foreign-born workers have been hard hit, even prior to COVID-19, as visa difficulties for incoming students and workers have intensified in recent years. The report states that if U.S. policies discouraging legal immigrants and students from working in the U.S. continue or intensify, slower growth will occur in communities that have been reliant on such demand.
COVID-19 is creating particular challenges in states with historically high inbound migration such as Florida, Nevada, Colorado, Tennessee, and Arizona, all of which typically rank in the top ten of states with the highest percentage of GDP in high-risk industries. Many workers will need to relocate to find employment, and states will need to plan for potentially more dramatic changes in their economies.
Rural areas in the U.S. may see an accelerated decline in population and economic growth due to the dearth of medical facilities and the large older population, significant negatives in a post COVID-19 world. Agricultural concerns due to lack of seasonal low-wage workers could also cause economic problems. Further decline could be offset by significant investment and innovations in telemedicine, remote working, remote entertainment, and the desire for a lower density living environment, according to the report, the Top Ten Issues Affecting Real Estate.
Dense urban areas may face particular challenges. A recent Harris Poll showed that nearly 40% of urbanites are considering fleeing the city as concerns about the virus and economic effects of the pandemic linger. Despite popular belief, suburban areas have continued to attract more people than urban centers, a historic trend lasting for many decades. However, in recent years, urban areas have successfully captured more affluent and younger people attracted to job access, public transit, entertainment, restaurants, and other advantages. If the value of urban living declines and access is rendered less important due to the aforementioned remote innovations, less dense and more affordable suburbs could grow even more rapidly. Potential expansion of suburban and “spoke” employment facilities to reduce mass transit reliance will also be a key factor in determining how far this dynamic progresses.
The Counselors' report states that the world’s approximate 70 million displaced people are particularly stressed as the cessation of migration leaves many with no place to go. The U.S., which has resettled an average of 80,000 to 150,000 refugees from 1980 to 2017, had already dropped to less than 10,000 by the end of 2019, prior to the COVID-19 crisis. The virus has also stopped many humanitarian flights and much international cooperation, and created the economic and safety conditions in hard hit areas that increase the likelihood of more people becoming refugees.
Migration, urbanization, and global connections are central components of growing the world’s economies. The flexibility of people to move to better jobs or available jobs has driven productivity and the real estate markets. Nationalism and now COVID-19 have reset the playing field for now, limiting migration, slamming the economy, and limiting international cooperation. Real estate implications will be determined by how long behavioral changes brought on by the virus last, the quality of innovations that emerge in healthcare, living, and working, and the caliber of world leadership.