It’s no secret that the Coronavirus pandemic has wrought economic devastation on so many individuals and their respective businesses. Indeed, in the commercial world there appears to be a clear disconnect between how the stock market or Wall street is doing, while main street continues suffering. One of the many industries where values have seriously depreciated is real estate. As an active real estate investor of over four decades, Shalom Lamm has been able to appreciate the movements of the real estate market in a way that few others can.

Indeed, in certain metropolitan areas where social distancing is a challenge due to the lack of space and the inevitable clutter among the population, citizens that can afford it have partaken in the mass exodus from the city to the suburban areas. This has led to an unprecedented amount of vacancies, that has in turn led to a decrease in rental prices around all these major cities. Those include but are in no way limited to New York City, Chicago and Los Angeles.

As with any economic analysis, when there is incredibly supply the market dictates that prices end up tanking – and they have already tanked in all of the above mentioned metropolitan locales. On his blog, Shalom has contributed insights about the long term and lasting effects that this mass flight outside of major city areas will have on overall real estate prices on these very same properties that are now vacant. Indeed, it’s not merely the rental market that is suffering. The condominium market is inevitably suffering as well.

With less people having an interest in living in the city, developers who have invested substantially in their own projects that are new construction are left with vacant apartments and loans from banks they can’t pay off. The snowball effect this will inevitably have on the financial health of the real estate market in these metropolitan areas will likely last for quite a bit of time.

There are certainly those that feel differently. We’ve seen consultancies say that there’s only going to be a momentary and temporary depreciation in the value of real estate in these major city areas. After all, according to the school of thought these consultants and analysts subscribe to, once a vaccine is finally discovered, all the issues that the Coronavirus has caused will vanish in a short period of time. Of course, the more cynical but more realistic perspective is that it will take a very significant period of time before any of these cities revert back to normal even after any such vaccine is found and developed.

As a consultancy by the name of Ambit Success has posited, many of the changes that the world economy has gone through will indeed outlast the pandemic itself. Their analysis even goes well beyond this. Look at the type of social rest stemming from the economic upheaval that the Coronavirus has caused, that has transpired in many of these cities. There’s no escaping this very sad reality. Real estate is not merely dictated on whether you’re living in New York City, Los Angeles or another established and well recognized city. Safety and security matter to both renters and buyers. And there’s no indication that will be changing in the near term or the long term. As such, the future is quite bleak for real estate values in these major city areas. Let’s hope and pray for the best, even under these very difficult and challenging circumstances.