Real Estate Trends To Watch Out for in 2021
The year 2020 led to unprecedented economic times for America. While unemployment rates soared, so did the stock market performance. Meanwhile, the housing market was held together by forbearance and moratoriums on evictions. These and other economic factors actually created a real estate boom in 2020. So, what will 2021 bring to the table? It is certainly too early to speak with any certainty, but itâs not too early to speculate.
1. Fewer Available Properties
The trend of a shrinking availability of homes has occurred for several years. However, economists predict the housing inventory will shrink even further in 2021. This will drive greater competition in the housing market and push prices further upward. Zillow predicts both a big sales boom and a sharp decline in housing affordability for buyers. Sadly, as people lose and abandon their homes and they fall into disrepair, this may add to the trend of shrinking inventories.
2. Stable Interest Rates
The housing market benefited from lower interest rates over the past few years. Some economists predict this will change under the new administration, but most people believe interest rates will remain low or stable. In fact, the new appointees at the Federal Reserve are likely to continue the trend of expansionary monetary policies in the next few years. The longer it takes to recover from the pandemic, the truer this will turn out to be.
3. Older Buyer Demographics
In the beginning, Millennials and Generation Z praised lower mortgage interest rates for making monthly mortgage rates fall within their qualifying DTIs. Over time, the lower interest rates brought more people into the market, which drove up home prices and canceled out the benefits of the lower mortgage rates. Existing properties are also appreciating, so older buyers who are already in the market will benefit significantly. For younger and first-time buyers, they may have little to no equity to take advantage of this.
4. Rural Housing Growth
The pandemic compelled people of all ages to reconsider whether city living was truly the dream they should pursue. In fact, 2020 saw a large migration of people out of cities into suburbs and out of the suburbs into more rural areas. As city entertainment remained closed, people also turned to the great outdoors for entertainment. Coupled with more remote work opportunities, the rural housing market is likely to experience continued growth. That said, Zillow predicts some buyers will start flocking back to the cities for 2021.
5. Alternative Housing
Over the past few years, buyers have been turning to alternative means to get homes. Those who still prefer traditional homes have bought fixer-uppers and rehabilitated them. Others have built homes from scratch or bought new-construction properties. However, other alternative housing options are also gaining steam. These include stick-built tiny homes, container homes, RV living and van life. The trouble with these more niche options is that they are difficult to fund and insure.
The year 2021 is shaping up to be a competitive time to purchase a home. In spite of this, sales are expected to reach new heights. Are you looking to get into the market for a home? We encourage you to consider National Home Loans for your mortgage needs. We provide a wide range of mortgage products, such as FHA, jumbo and rehab loans. Contact us to request rates.
