Whether you work in real estate or are interested in buying or selling a home in the upcoming year, it’s important to understand both the current and the projected states of the housing market. Here are some real estate trends to keep an eye on for 2021.
Prices And Turnover Rate Still On The Rise
COVID-19 left the housing inventory in short supply in 2020, causing prices to spike. This trend is expected to remain throughout the winter and carry into the new year, as there is still a shortage of available housing with a higher-than-normal demand.
For sellers, this can be good news: the median home sales price is anticipated to rise 5% – 6%, and according to Norada Real Estate Investments, the turnover rate for homes is better than ever, with time spent on the market a whole 14 days less than that of a year ago. Not to mention, that sellers right now face much less competition than seen in a typical real estate season.
The Buyer’s Market Will Be Competitive
On the other side of the coin, entering the housing market as a home buyer could prove challenging in 2021. Not only are housing prices expected to continuously rise, but due to increased demand, you should expect a competitive market. So, if you want to purchase a home, chances are that you’ll have to act fast to beat out the competition.
But there are some advantages for those seeking a home in 2021, including interest rates which could dip as low as 2.9%, according to a Fannie Mae forecast. There have also been instances of landlords lowering their prices on rental spaces, or even offering incentives and complimentary services to draw in new tenants. So, if you’re looking for a temporary office space or have always dreamed of living in or near the city, now might be the time to make that move.
People Are Flocking To Suburbs
With the increased necessity of working from home for many Americans, space has become an especially attractive commodity – particularly, affordable space. Because of this, suburban areas – which we’re already seeing an upward trend of interested buyers pre-COVID-19 – are more popular than ever.
Real Estate Has Gone Virtual
Before the pandemic, many of us enjoyed perusing online, looking at different homes for sale in our area. But with social distancing in play, virtual formats have become a new normal, with many real estate agents utilizing live stream features on social media for open houses, and more emphasis placed on virtual tours, videos, and photographs in home listings.
While many may be reluctant to make such a large purchase without ever entering a prospective home in real life, the digital tools that many have used in 2020 are sure to stick around throughout 2021.
If you’re a real estate professional, consider brushing up on the digital marketing methods others have used on social media and real estate websites.
Will the housing market crash in 2021?
With so much economic uncertainty surrounding 2020, many have speculated if we’ll be hit with a housing market crash this year. To quell any concerns, a housing market crash or recession is highly unlikely in 2021.
The initial impact of quarantine lockdowns has since seen gradual improvement as favorable interest rates have boosted home buyer confidence. In fact, according to Norada Real Estate Investments, even though we’re facing another spike in COVID-19 cases, the most negative impact we’re likely to see is a short-term decline in rental units before reentering a period of steady recovery.
Will home prices drop in 2021?
Due to high demand and low housing inventory, the 2021 real estate market will favor sellers for the most part. However, a Haus forecast did predict a drop in home prices between 0.5% – 2.5% from October 2020 to July 2021.
The Bottom Line
With so much uncertainty affecting our jobs, the economy, and day-to-day life it can feel incredibly difficult to plan for the future. But with expert forecasts and market patterns, we know to expect a red-hot seller’s market in 2021 – it could be a great time to list your home, especially if you’re in a suburban area.
We also know to expect a decrease in rented units, which may incentivize landlords to offer lower prices and better deals. So, take advantage of these opportunities if you’re looking for affordable office space or new housing closer to the city.
Lastly, although 2020 was tumultuous and 2021 may seem daunting, it’s important to keep in mind that the housing market is leading our economy toward recovery, and we shouldn’t expect an oncoming market crash.
Check out another one of our articles to recap on 2020’s housing market trends, or visit our blog to learn more about 2020’s record-low mortgage rates.