You need to switch to user hass before you start your upgrade and run homeassistant, otherwise it is looking at a completely different configuration.
Unfortunately, now you have run the command as root, you have probably set the permissions to files incorrectly, and it will have problems updating as user hass, but you might try it.
If it doesn’t work, the simple option is to remove the virtual environment directory and recreate from scratch, as hass user (using the instructions on that page).
which keeps it, but allows you to create a new one, just in case there is something in it you want to look at later. Then at some point later you can do