2020 was a life-changing year in many areas, including real estate. No one could predict what would happen to the housing and mortgage industry, but as luck would have it, everything came out clean as a whistle.
As we move into a new year, everyone wonders, ‘what’s the real estate market outlook for 2021?’ Will housing continue to be a hot commodity? Will interest rates stay low too?
We don’t have a crystal ball, but we partnered with some experts to give our best guess on what the real estate market will look like this year and into next.
Here’s what you can expect.
2020 Helped Real Estate Agents And The Real Estate Market Grow
2020 was tumultuous. Real estate agents had to pivot in ways they never had to before.
Suddenly you couldn’t go into anyone’s house, which is how real estate agents prepare and sell homes. They were all left up in arms until the industry came up with new regulations that made it easier to buy and sell homes.
It took time to work out the kinks and make it smooth sailing, but at the close of 2020 and the start of 2021, things are looking up.
It is no longer ‘weird’ to look at homes online; it’s normal. While we’ve always looked at homes on sites like Roofstock Marketplace to see what’s out there – we always had the option (or privilege maybe) to walk through homes in person.
When that was taken away, it felt weird. You had to view homes online and sometimes even have a ‘live’ tour via video. While you still worked with your reputable real estate agents, there was still that odd feeling of not walking into the home to see it for yourself.
Today it’s no longer ‘weird,’ it’s normal and welcomed. Everyone can stay safe, and real estate transactions can still occur.
The ‘New Norm’ Paves The Way For More Sales
Now that we’re in our ‘new normal’ in most areas of the country, people are relaxing. Working from home isn’t as traumatizing as it seemed at first, and low mortgage rates are a welcome sight.
Now that people are comfortable working from home and settling into their routines, they have more time to look at homes. They’ve also had time to work out their financial issues, stabilize employment, and be a better candidate for a mortgage.
What does this all mean for 2021?
All signs point to more real estate sales, and Chief Economist from the National Association of Realtors, Lawrence Yun, agrees. With record-setting growth for 2020, Yun predicts new home sales will increase 21 percent in 2021, and existing home sales 9 percent.
It will be a combination of more flexibility with more people working remotely and the desire to change locations suddenly becoming an infinite possibility.
Buyers May Have To Dig For Their Dream Home
Even with home sales expected to increase, finding your dream home may feel like looking for a needle in a haystack this year too.
Thanks in part to the economic stimulus payments and lockdowns we all experienced, there will still be more buyers than sellers. Millions of people put the stimulus funds away and even saved more money by cutting down on spending and entertainment during the lockdown.
The excess funds make it easier for buyers all over the country to buy their dream home, but they may not be as easy to find. While home sales are expected to increase, you may have to look a little harder depending on where you live.
Roofstock Marketplace makes it easy to find the newly listed homes, giving you a jump on the competition as 2021 promises to be just as fiercely competitive as 2020.
Buyers Must Act Fast
The low inventory means buyers must act fast. There is a lot of competition for the same home. As of December, the average home sold in just 21 days, and the trend promises to continue into 2021.
This means buyers must know what they want and make fast decisions. Bidding, negotiating, and getting funds and paperwork should all be done fast to beat out the competition.
Foreclosures Will Still Be A Fierce Part Of The Real Estate Outlook For 2021
2020 was a year of no foreclosures or eviction thanks to the CARES Act. As Americans figured out their next steps, they didn’t have to worry about losing their homes amid the pandemic.
How long this protection will last, no one knows. With a new administration and a new year in front of us, anything is possible.
ATTOM Data Solutions predicts 225,000 to 500,000 foreclosures throughout 2021. This is bad news for homeowners but good news for homebuyers. With more foreclosures entering the market, finding the perfect home for owner occupancy or investing will be a lot easier.
In the same study, ATTOM Data concluded that the number of foreclosures in 2021 will double the rate we saw in 2020. That’s not surprising given the break homeowners were given for most last year.
Low Mortgage Rates Continue To Fuel Growth
Another reason housing demand will remain high is mortgage rates. We continue to see rock bottom rates that most of us haven’t seen in our lifetimes.
30-year fixed mortgage rates still sit at 3 percent for most borrowers, which is unheard of, making it easy for even first-time homebuyers to secure a home loan. Because of the many flexible loan options today, you don’t even need a large down payment for owner-occupied properties.
Investment properties usually need higher down payments, but there are even ways around it. If you ‘house hack,’ you can use FHA financing to buy an investment property.
House hacking means you buy a multi-unit property with FHA or any other government-backed financing. Normally, you must occupy the property to use FHA financing, but you can do both with house hacking.
As long as you live in one unit, you can rent out the other units. Using the money to pay your mortgage and enjoying the cash flow, you can buy an investment property with 0% – 3.5% down, depending on the loan program used. You can find a large variety of multi-unit investment properties on Roofstock Marketplace to get started.
What Will 2021 Look Like For Buyers?
Buyers will have an easier time in 2021 than 2020, but it won’t be an easy street. Inventory will remain limited, but you’ll see a slight increase in existing home inventory and new home sales as construction levels restore.
Remote working makes it easier for buyers to look in all areas, not just the crowded cities. Homebuyers and investors are moving their sights to smaller towns and less populated areas, taking more land and peacefulness in exchange for the hustle and bustle of city life that doesn’t exist like it used to.
2021 will still have buyers viewing homes virtually, and most research will be done online. This makes it easier to complete the process faster, which may create a more competitive environment for buyers as homes sell faster.
For buyers to be competitive, they must be organized. Getting your finances in order, ensuring you have enough money saved, and getting pre-approved will pave the way to winning the bid. Don’t look at homes or even contact a real estate agent until you’ve got the pre-approval under your belt.
What Will 2021 Look Like for Sellers?
Sellers are in a good position in 2021. Home prices continue to rise, and the demand isn’t slowing down either.
With low mortgage rates still in full swing, expect demand to stay high. Be ready to sell your home fast, which means being organized with your plans. Where will you go? Will you buy a new home too?
Sellers can expect bidding wars, higher prices, and fast sales in 2021 if the trends continue.
The Real Estate Market Outlook For 2021 Is Optimistic
The bottom line is the real estate market outlook in 2021 is excellent. Buyers and sellers have a lot to look forward to and gain.
Whether you’re a buyer looking for the perfect home and low-interest rates or a seller hoping to max out your capital gains, everyone can have their way this year if things continue on the path they’ve been on.
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