What we can expect to see in the real estate market in 2021?
Throughout 2020, the economy struggled as people lost jobs and companies faced bankruptcy. Many people are still receiving unemployment benefits and relying on rent assistance. Some would assume that this would put the housing market on hold since people who are not making money don’t typically have the money to spend on large purchases. However, this is not entirely true.
Many people are entering the housing market. Homebuyers and sellers were active during the holiday season; more active than they were during the recession in 2008. And mortgage rates continued to decline through the end of the year, making it more affordable for people to purchase homes by allowing for lower monthly payments. Construction of houses even began to rise in November, driven by the low-interest rates.
While people were very actively looking to buy homes at the end of the year, it is not the most welcoming market for buyers. Housing inventory has been and continues to stay low. This leaves few options for people looking for a new home and has led to a competitive market.
What will all of this mean for 2021?
Prices: Up to this point, demand from buyers has been high and people have continued to purchase houses at high prices; low-interest rates have diminished the blow of the price tag. However, affordability will play a larger part in the market as prices continue to rise. The number of applications for loans has already begun to go down. This could signify there will a decrease in home sales.
Buyers: Because so many people are working from home now, we expect there to be a shift in the “wants list” for buyers. People are more likely to look for homes with larger backyards, even ones that contain a pool or large lounge area. People are also likely to want more room in the home for an office-area or place to teach their kids.
However, as a buyer, it might be more important to stay flexible. Since inventory is low, you might want to expand your search and have to sacrifice some wants. If you are looking to buy, it is also a good idea to get pre-approved as soon as you can!
Sellers: The high demand for housing means that homeowners will be able to sell your home at a higher price. In the next year, house prices are expected to rise by 5% – 6%. This is great news because you can use the extra profit to put towards your new home.
To get the most for your house, while still pricing it appropriately, it is a good idea to work with a real estate agent. Real estate agents know the current trends and can help you determine a price that will succeed in your area and analyze any offers you receive to find the best fit.
A Positive Outlook
Our current economic state is causing a lot of uncertainty. Some people are concerned that the housing market will crash. While it is nearly impossible to say for sure that there will not be a crash in the housing market, economists say that it seems very unlikely. The housing market is more likely to stay competitive. Since low mortgage rates are influencing buyers to enter the market, and inventory is down, demand is up and home prices will continue to rise.
So far, the housing market has helped the economy rebound from the hit of the pandemic. We can only hope that this trend continues throughout the year. Subscribe to our newsletter to receive current industry insights and tips to help you with your real estate journey.