There’s no doubt 2020 has been an unpreceded year. The world was rocked by the COVID-19 pandemic, creating a ‘new normal’ for how we conduct business and go about our daily lives.
As we move into a new year, it’s time to look at the big picture and what’s coming for 2021. Two primary factors will play a role in our lives at both the Federal and local levels. The roll-out of the COVID-19 vaccine has begun in late 2020. And the election of Joe Biden as the incoming President in January means we’ll also see a government transition.
It shouldn’t come as a big surprise these events will continue to play a role in housing market predictions. Here are a few real estate trends 2021 might bring.
The New Administration Focuses on Improving the Market
A divided government will likely mean the gridlock in Washington will continue. However, that doesn’t mean a new administration won’t impact housing market trends in 2021.
President-Elect Biden has pushed a first-time homebuyer tax credit of up to $15,000. This policy is something that could give a boost to encourage Millennials and Gen Z to buy, many of whom are looking to move out of cities and into the suburbs. Something else impacting this generation is student loan debt; if some of that is forgiven, it could open the door to more available buyers.
A boost in new construction is another factor to keep an eye on in this administration. 2020 had strong levels of new construction, both for single-family homes as well as apartments. Biden has pledged to provide funds for more affordable housing to be built in the coming years.
The Pandemic’s Impact on Housing Will Continue
A combination of low-interest rates and more work from home flexibility meant the 2020 housing market was robust. Many housing markets across the country were hot, with low inventory and rising prices.
That doesn’t look to be slowing down in 2021. The economists at Realtor.com expect to see continued upticks in the number of homes on the market and the prices, good news for prospective sellers. However, the inventory will likely be tight, something that can impact the market for buyers.
On the other side of things, there is also the potential for the economy to continue having a slow return. That coupled with potential expirations of financial protections for workers could translate into a rise in foreclosures.
Technology Plays a Role in Home Buying and Selling
With the rise of Zoom and other technology, it quickly became apparent in 2020 that many “in-person” events could be done virtually instead.
An interesting impact of the transition to the virtual included home tours. Many resourceful real estate agents set up and showcase homes using virtual tours and live social media events. Other tools have been making strides during the pandemic as well, including parts of the home buying and selling process that transitioned online include e-closings.
While in-person will still be the norm for home tours, don’t be surprised to see the continued digital movement in 2021 for other parts of the process.
Work from Home Becomes More Common
If there’s one thing that could become the new normal once COVID-19 is behind us, it’s the impact of working from home. While plenty of Americans will head back to their offices, working from home will likely continue at least part of the week. Redfin predicts that over 14 million Americans will relocate in 2021.
That trend means plenty of prospective buyers:
- Can work from anywhere, so they are moving to new parts of the country, especially where housing might be more affordable.
- Are willing to move further into the suburbs and rural areas for more space since they might only need to be in the office a few days a week.
- Want a home that’s more conducive to a positive working environment, which could mean fewer open floorplans or a dedicated office.
One cohort impacted by the work from home trend is the Millennial generation (25-40). This group makes up the largest segment of the workforce and will play a large role in the future housing market.
These are just a few of the housing market predictions and real estate trends 2021 might have in store. If you want to learn more or have questions about the home buying process, get in touch with a loan officer at OVM today.