If the real estate market in 2020 were to be characterized by a sound, it wouldn’t exactly be the sound of crickets chirping, but it also wouldn’t be a boisterous parade. Despite the lull of pandemic shutdowns, the real estate market was something of a comeback kid last year and had a strong finish. As we move into 2021, these are some of the key trends expected to shape real estate.
Working from vacation homes
An interesting housing trend we expect to carry through this year – and possibly even build as the year progresses – is the increase in second-home purchases. With many companies making positions permanently remote, workers across the country are realizing freedom in where they conduct business. 2020 ushered in a new wave of people purchasing second homes and deciding to position themselves there for long-term stays. Second-home purchases will likely continue to build in 2021 as long as there’s inventory to buy. Who wouldn’t want to work from their vacation home?
Low mortgage rates and easier entry point
If you’re thinking to yourself, “Second home? What about buying my first home?” You’re not alone. There is excellent news to be had for first-time homebuyers.
HomeLight, a leading real estate referral agency, conducted a Q4 survey of 1,000 top agents scattered in markets across the country. According to 97 percent of agents, low mortgage interest rates were boosting buyer demand in their markets. And of those agents, 34 percent said they expected those rates to rise as people receive the COVID-19 vaccine and the economy improves. So, no time like the present, right?
On top of low-interest rates, we have a new administration in office as we go into the new year. The Biden administration is expected to usher in the First Down Payment Tax Credit shortly after taking office. With this incentive, first-time homebuyers receive a tax credit – up to $15,000 – at the time of purchase instead of waiting until they file taxes the next year. This program is expected to bring even more buyers to the market.
The real estate industry is prepared for possible virus surges
While March of 2020 had people in the real estate industry scrambling to figure out how to buy, sell, show, and close on homes safely, new protocols are in place. So, should we see spikes in the virus, real estate transactions will still occur with the help of virtual open houses, remote showings, and digital closings.
The vaccine is a key player
For many homeowners, 2020 was the year that they were going to sell their homes, whether downsizing or relocating. However, once the pandemic brought things to a halt, those poised-to-sell homeowners decided to play it safe and wait things out. A year later, a vaccine is rolling out to the masses, and agents anticipate their reluctant sellers from 2020 to surface and list their homes. This additional inventory on the market is vital as we look at a final trend.
Lack of inventory
2020 was already a sellers’ market, but when more significant numbers of would-be sellers decided to hold off on listing their homes, inventory levels hit all-time lows. With historically low mortgage rates bringing buyers to the market in droves, low inventory levels paved the way for bidding wars on available properties. Indeed, 84 percent of agents say that inventory in their markets is lower than expected, which is why those would-be sellers from 2020 are even more critical this year.
No matter what happens in the coming year, you can bet that the real estate market will continue to hold firm. Industry professionals are using technology to their advantage to keep real estate transactions fluid.
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Posted by Shane Andersen on