These days, it's pretty much impossible to read the news without seeing the term "delta variant" flash before our eyes. But the unfortunate reality is that the delta variant is now the predominant COVID-19 strain in the U.S., and due to its highly transmissible nature, it puts those who aren't vaccinated at a greater risk of infection.
Clearly, that's bad news from a public health perspective. But it could also be very bad news for real estate investors.
Will the economy experience a setback?
During the pandemic, a number of key real estate segments got hit. Office buildings, for example, have grappled with record-low occupancy rates in some markets as companies have kept their workers remote in an effort to limit the spread of COVID-19.
Meanwhile, hotels took a beating in 2020, clocking in their lowest occupancy rates on record. And restaurants saw revenue decline substantially as capacity limits and other restrictions forced dining establishments to turn away guests.
The impact of the pandemic trickled all the way to student housing. With many colleges closed for in-person learning, the demand for nearby housing waned.
But over the past couple of months, things improved. The economy added jobs, and the unemployment rate declined. The CDC was so happy with the efficacy of COVID-19 vaccines that it gave the fully vaccinated the go-ahead to ditch masks, even in public settings. Travel restrictions were lifted on a national level, and capacity limits at places like restaurants and bars were lifted.
The delta variant, however, has the potential to erase all or much of that progress. If COVID-19 cases continue to surge and more people don't get vaccinated, the pandemic could drag on for months or years longer than it needs to. And if things get worse in the near term, lawmakers might reverse course as far as restrictions go. That could, in turn, create a scenario where out-of-state travelers once again have to quarantine upon arrival, restaurants have to spread tables further apart when welcoming guests indoors, and colleges have to revert to online learning in an effort to keep students safe.
All of that could be catastrophic for real estate investors, especially at a time when many sectors, like hotel and office REITs (real estate investment trusts), haven't recovered from the events of the past year and a half.
Furthermore, if COVID-19 fears crop up again, it could put an end to the travel boom that vacation homeowners have been enjoying this summer. It could also put a wrench in employers' plans to bring workers back to the office, and it could keep more shoppers out of enclosed malls, which also suffered a major blow in the course of the pandemic.
The Millionacres bottom line
The good news is that the COVID-19 vaccines currently available are said to offer a solid amount of protection against the delta variant. The bad news is that a large percentage of the U.S. population won't be getting a vaccine anytime soon. And that could end up putting real estate investors in a very unfavorable spot as 2021 chugs along.