2020 is a year that will go down in history books, causing many Americans to either scratch their heads in confusion or shake their heads in disbelief. Terms like “new normal” are, well, the new normal, as the pandemic seeped into all aspects of daily life. 2021 is the year we bounce back, and it’s already being shaped by the effects of last year. Let’s take a look at some of the trends expected to shape real estate this year.
- Low inventory levels
According to 84 percent of agents responding to HomeLight’s fourth-quarter survey, inventory in markets across the country is lower than expected. Unfortunately, these 20.5 percent of agents think that a continued lack of inventory in 2021 will significantly influence housing. These responses aren’t exactly surprises, given that inventory levels were already low before the pandemic shut down construction and made would-be sellers hesitate to list their properties.
- Vaccines will boost consumer confidence
The good news, especially in terms of low inventory levels, is that 50 percent of agents believe a widely distributed vaccine will encourage more sellers to enter the market and unlock inventory. Market watchers can expect to see these inventory increases later this year, as the vaccine is more widely distributed.
- Homes will be lost to foreclosure
Sadly, as government stimulus and forbearance plans wrap up, a percentage of homeowners will find themselves facing foreclosure. This housing market prediction is the unfortunate consequence of months of shutdowns, mass layoffs, and business closures. And while this may contribute to greater inventory levels, it’s worth pointing out that market conditions make it very likely that homeowners can sell their properties before foreclosure.
- New administration = new programs
It seems that all roads lead back to inventory levels, and having a new administration in office is expected to shake things up in the real estate industry. The Biden administration could very well introduce programs that create inroads in the real estate market, and one that’s highly anticipated is the First Down Payment Tax Credit. With this credit, first-time homebuyers will receive assistance getting over the hurdle of a down payment in the form of an up-front and immediate tax credit. Rather than waiting until the following year to file taxes and receive a credit, first-time homebuyers will receive their tax credit when they make their purchase.
- Mortgage rates to remain low
You don’t need to look into a crystal ball to know that low-interest mortgages are still expected to affect the real estate market. In fact, 97 percent of agents said that low rates were boosting demand in their respective markets. However, the type of demand is what makes the effects of low-interest rates in 2021 unique. Sixty-eight percent of agents have seen renters speed up their plans to buy a home and 66 percent of agents said that current homeowners are trading up earlier than anticipated. And when it comes to the older population, 46 percent of agents say that older adults are downsizing their homes sooner than they’d planned.
- Remote work = more moves
When you aren’t tied to a specific area and a commute, the options are practically limitless. With many companies making remote positions permanent this year, 14.5 percent of agents say that the shift to remote work will have the biggest impact on shaping real estate in 2021.
- Panic won’t make things grind to a halt
One of the pandemic’s far-reaching effects is the increased reliance on technology in the workplace, and the real estate industry is no exception. While the industry had some tools already in place, there was a slow adoption of many of the digital tools at its disposal. However, months of shutdowns forced agents and brokers to get creative in finding ways to keep business going. This year, should there be another drastic spike in the virus, real estate professionals are prepared to continue business with virtual tours, remote showings, and digital closings.
Against all odds and even many forecasts, 2020 was an excellent year to buy and sell homes. With the market remaining strong in 2021 and low-interest rates bringing a continual flow of buyers to the market, the real estate industry is prepared for almost anything that comes its way.