Happy New Year!
I can’t imagine too many of us were reluctant to say goodbye to 2020 with all of its nonsense. With the new year comes renewed hope and excitement regarding what 2021 has to offer and I am excited about what I believe is going to be another successful year in the real estate industry. There is no doubt that we will face some challenges but, overall, the outlook is bright. Let’s take a look at few real estate predictions for the year.
Will We See a Shift in the Market?
I get asked all of time if we are about to see a shift in the real estate market and this year it is possible, but too early to make a call on that. Last year we experienced what many considered a sellers’ market with wildly rising values driven by an imbalance in supply and demand. In my opinion, 2021 is going to see more of the same but at a slower rate. There has been no indication of an increase in inventory early on, but it is possible during the second half of the year.
Supply and Buyer Demand
Low inventory is going to continue to challenge buyers specifically in the first-time home buyer market as Gen Z’ers begin competing with the youngest of the Millennials. These two generations have outgrown the baby boomers and are poised to drive real estate sales in the new year. Many millennials are now at a stage in life where they are ready to move up, so this may alleviate some of the inventory pressures in the entry level market. I believe that interest rates are going to continue to remain historically low which is not only going to appeal to just entry level, but all buyers.
Suburban and Rural Growth
The one major shift that should carry over into 2021 is the fact that many homeowners are now working from home and this has caused them to reevaluate their living arrangements. Capitalizing on the low interest rates and decreased concern regarding commute times to work, homeowners are now leaving the city and driving suburban and rural growth. This will result in a higher demand for new construction, as buyers look for larger, multifunctional spaces to meet their housing needs.
There are, however, a few wildcards that could potentially affect the 2021 housing market and it’s no secret as to what those are: Quarantines, a Recession, and Vaccines. As we continue to manage the constraints of a global pandemic, our market runs the risk of change because of things beyond our control. Assuming a positive success rate of the distribution and administration of the Covid19 vaccine and the prevention of a deepening recession, we should see a boost in consumer confidence and spending. Should we experience increased levels of unemployment and stagnant income growth because of additional quarantines and a further decline in our economy, then we could experience a cooling off period.
Overall a Positive Outlook for 2021
I am hopeful that while we do face some uncertainty, the 2021 real estate market is going to continue driving our economic recovery. I believe that buyer demand is going to remain high and sellers will continue to capitalize on their equity positions. Cheers to a happy and successful 2021!
If you’re thinking about building, buying or selling this year, contact me to set up your complimentary real estate consultation.