Pre-pandemic, the housing market was another playing field. Experts predicted mortgage rates would increase in 2020, there would be a tight inventory for first-time buyers, and a flat home price growth. Then, just two months into the year, everything seemed to come to a ceasing halt.
Housing rates hit new lows, causing the market to hit an all-time high. The housing market saw higher prices in nearly every region. As the world adapted to its new reality, many homeowners chose to refinance instead of sell.
In the meantime, housing experts figured out how to predict the unpredictable. Here’s the thing – the market didn’t just adapt to the new state of the world – it thrived in it. Experts considered everything – from the state of the COVID-19 vaccine to the current lockdown orders – when calculating a prediction for the 2021 market. So, whether you’re looking to buy or sell a home in 2021, we’ll let you in on exactly what you can expect.
Values (and Prices) Continue Rising
There’s no indication that the price growth will be slowing any time soon. Research by Zillow Economic shows that the sales price for new houses sold in January 2021 was up 5.3% from January 2020. They predict that home value growth could rise as high as 13.5% by mid-2021. By the end of the year, they may be up 10.5% from their current levels. Not only has the supply of new housing reached a high since the start of the pandemic, but we are in need of new homeowners to meet it.
To put this in perspective, here are some key stats from the market:
- National inventory declined by 39.6% over the last year and fell below 700,000 for the first time in their records.
- The inventory of newly listed properties declined by 0.8% nationally and grew by 7.6% for large metros over the past year.
- The December national median listing price was $340,000 – up 13.4% compared to last year. Large metros saw an average price gain of 8.8% compared to last year.
- On a national level, the typical home spent 66 days on the market in December, 13 days less than the same time last year.
Clearly, we can expect slower economic growth next September, which will start to affect home prices. This will result in lower asking prices. There is a possibility that we might see a wave of foreclosures by mid-year, but only time will tell.
Whether you plan to buy or sell, research points to the first half of the year as the best time to do it. Buyers do have a little more leeway, as they could have more options and less competition later on.
Construction Needs to be Considered
Construction is another point to consider. At the start of the pandemic, all construction came to a halt. Now workers are playing catch up, and depending on the state of COVID-19 regulations, we can expect an increase in construction projects ahead. Housing began to pick up in October 2020, indicating that construction won’t be far behind it.
Most construction seems to fall into two categories: Luxury and 55+ developments. What does that mean for you? If you plan to sell this year and your home is on the higher-end or in an area with 55+, the new construction could mean competition. Do some research into your area – are there any new construction projects that might impact your sale? Are there big commercial projects in the works? Commercial projects could make your property more attractive to buyers.
Remote Work Might Be Here to Stay
Working from home has been a staple of the pandemic for many families. While some businesses plan to return to the office in the future, others are finding that a virtual workspace is more beneficial in terms of finances and productivity.
If your home is located in a business district, near office buildings, or downtown, this might mean a tougher sell. Homes in those areas were once attractive to buyers because of their proximity to the workplace. Work from home could lessen the demand in those areas. On the other hand, homes located near parks or recreation areas might see an increase in demand.
We might also see a rise in rural areas, due to their beauty, solidarity, and outdoor recreation options. After all, work from home does mean that people no longer have to live near a city in order to do their job.
The world’s new normal is a remote workforce, which means staging might look a bit different now. Where sellers used to stage guest rooms, they might show off office spaces. Features like smart home technologies and open and bright spaces are more sought out than guest rooms, entertainment rooms, and dining rooms.
We must also consider that those who work from home are looking for new ways to spend their free time – particularly outside. This means that homes with large yards will be especially appealing. When staging the outdoor space, it will be important to make the area as attractive as possible. Fireplaces, outdoor kitchens, patio furniture, hammocks, outdoor media, and even pools are all ways to make that space magnetic to potential buyers.
While we can’t predict where a remote worker might choose to relocate, we can foresee the trends. Highly populated vacation areas might become “home” to remote workers, for instance. If you live in a wonderful school district with reasonable housing, away from business districts, you can expect some new neighbors. Whether you’re selling or buying, look for resources for those moving in or out of the area.
The pandemic has certainly affected market prices and changed the way people want to live, so this will be a fascinating year to watch unfold. As a buyer or a seller, it’s essential to be as informed as possible about what’s to come.
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