By Aahoo Pourang: While 2020 was a challenging and unstable year for most markets, it’s instability has impacted the upcoming real estate trends of 2021. In 2020, we saw the housing market quickly becoming disrupted by the COVID pandemic during the spring. Fortunately, it made a swift (but shaky) rebound with brokers and realtors adjusting to create a no-contact environment for the safety of their clients. What should have been a hot season in Real Estate during the Spring ended up being a surge in home sales toward the end of 2020. Here’s what we know so far:
Prices Are Still Rising
Despite the pandemic, October 2020 saw a 16% growth in home price increase. For home sellers, this means a great profit! Given the increase in cost, a greater profit means extra money a seller may need when purchasing their next home. According to HousingWire.com, 2021 is forecasted to continue as a seller’s market. For buyers, this means really calculating on how much is in a realistic budget and saving 20% down payment to avoid PMI, which can cause unnecessary interest and fees. It also means choosing the best loan when purchasing from a mortgage company you can trust. Which leads us to our next trend:
Low Mortgage Interest Rates
As of recent months, interest rates have been considerably low, dropping to 2.31% in November 2020. If 2021 sees the same trend, economists believe interest rates will continue to dance around 3%, which is still on the lower end. For buyers, a lower interest rate means more affordability and time to pay off a home. For sellers, it means buyers will have greater motivation to purchase a home–sooner than later.
By October 2020, inventory was down by about 20% compared to 2019. There weren’t enough houses to meet the buyer’s demand, which means more buyers will have to make sacrifices when purchasing a home. Buyer’s will also have to get preapproved for a mortgage much quicker and will have to expand their search. What a low inventory means for sellers is that they’ll have less competition, and more buyers eager to view the seller’s property. However, inventory is expected to make a slow and steady comeback in 2021, so it’s possible that by the end of the year, there will be a switch from a seller’s market to a middle ground for both buyers and sellers.
Realtors and Brokers adapted fairly quick to FaceTime and Zoom walk-throughs of homes or having a 3D virtual open house due to the pandemic outbreak in Los Angeles and Orange County. Also, with companies like doc-u-sign, it’s been easier to handle document-based transactions without in-person contact. In 2021, we’ll most likely see Real Estate functions become more digital until the COVID vaccine becomes more widespread, or by then, Real Estate will quickly adapt to going digital.
It’s unfortunate that the real estate market and trends are in the hands of a crisis that is so unknown. As the COVID vaccine roles out, the virus still remains a ‘wildcard’ in 2021.
Other Sources: Dave Ramsey Blog