What does Real Estate Look Like in 2021?
News of the pandemic hit in spring 2020, sending the real estate market into a tailspin. While some areas allowed agents to continue business with precautions in place, other areas forced real estate transactions to a halt, which led to much insecurity about the market. However, real estate proved to be the comeback kid in 2020 and is expected to remain strong into the new year. Here's a look at seven trends expected to shape real estate in 2021:
1. Low inventory remains a driving influence
Leading real estate referral company, HomeLight, conducted a Q4 survey of top agents across the country to get a feel for market conditions and gather predictions for the coming year. Unsurprisingly, 84 percent of agents surveyed responded that inventory in their markets was lower than expected.
In addition to halting businesses conducting person-to-person transactions, 2020's pandemic shutdown also halted new construction, which was already lagging behind demand in areas around the country. Another factor influencing low inventory was the sheer number of sellers who opted not to sell in 2020, as they'd anticipated.
2. Vaccine to boost consumer confidence
Those sellers who held back listings in 2020 will be more comfortable with selling in 2021. Whether they were uncomfortable opening their home to strangers or felt that the economy was too insecure to sell, many would-be sellers held back due to the pandemic. However, 50 percent of agents across the country said that a widely distributed vaccine would encourage more sellers to enter the market and unlock inventory.
3. Homes will be lost to foreclosure
The pandemic's effects on the economy were uneven, with many small business owners unable to rebound from forced closures and others facing a loss of work and wages. Whatever the reason, a segment of homeowners will unfortunately not catch up as forbearance periods and stimulus plans come to an end.
4. Low mortgage rates
In a year filled with uncertainty, mortgage rates hit an all-time low, encouraging more buyers to enter the market. The outlook for 2021 remains strong, as agents predict that low mortgage interest rates will create market activity with outlying consumer segments. However, as the year progresses and vaccine availability increases, and the economy improves, 34 percent of agents predict interest rates to rise.
5. Permanent shift to remote work
With the pandemic forcing companies to allow employees to telework, more and more companies are viewing remote positions as viable and sustainable. Fourteen and a half percent of agents report that the shift to remote work will significantly impact the real estate market in 2021.
6. Less panic
Most of the country is a few weeks into COVID-19 infection rates spiking, but the response this time around is a bit different. Last March, everything came to a complete standstill, and grocery stores had empty shelves. This time, people are better prepared to keep themselves safe, and the real estate industry is relying on the solid framework of tools they instituted last spring. With virtual tours, remote showings, and digital closings, the real estate market can continue doing business at a bustling rate.
7. New administration in office
With a new administration in office, housing affordability challenges will be lessened with new programs and regulations in place. Agents across the country see Biden's First Down Payment Tax Credit initiative as a positive program for getting new buyers into the marketplace. Once this program is instituted, first-time homebuyers will receive a tax credit – up to $15,000 – when they make their home purchase, rather than waiting until they file taxes the next year. It's a game-changer for many potential homebuyers.
As with anything, take these housing market predictions with a grain of salt. While the outlook is informed by the opinions of top real estate professionals across the country, the uncertainty that comes with a pandemic means that anything can happen. Right now, however, 2021 looks to be an excellent year for real estate!