Real Estate Predictions for the New Year
While we can’t gaze into a crystal ball and tell you exactly what will happen with the housing market in 2021, we can certainly make some educated predictions. Real estate was one of the big winners of 2020, and experts agree that the market will continue to be strong in the coming year. Here’s a peek at what we think the biggest trends will be for real estate in 2021.
Normal seasons will return
Even though the real estate market was strong for most of 2020, it did not follow normal trends. Typically, the spring and summer seasons are the busiest, while the fall and winter seasons tend to be slower. That was not the case in 2020. The pandemic disrupted the spring market and buyers did not return until well into summer. As a result this fall and winter have been much busier than usual. As we head further into 2021, experts predict that we’ll see a return to normal seasonal trends.
Home prices will continue to increase
One of the biggest characteristics of the 2020 housing market was a shortage in inventory. Sellers returned to the market at a slower rate than buyers. With fewer houses to choose from, prices increased. While we won’t see the same skyrocketing prices that we did in 2020, home prices will increase just at a slower level. More sellers will return to the market, which will provide some much-needed relief.
Home sales will slow
Record-low interest rates encouraged buyers to flood the market to take advantage of the savings. Homes sales increased slightly year-over-year in 2020, and experts believe that they will begin to slow in 2021. As we return to normal seasonal trends and buyers are less worried about increasing interest rates, the pace of home sales will also normalize.
Inventory will improve
Low inventory has been a trend in real estate for some time, and the pandemic exacerbated the problem. However, experts predict that inventory will also begin to normalize and follow typical seasonal trends. In fact, some believe we may actually see an increase in inventory for the first time since 2019.
Millennials and Gen Z become bigger players
The oldest millennials are turning 40 this year, which means that many of them are already purchasing their second homes. Younger millennials and Gen Z buyers will also begin to enter the housing market. These generations generally make smaller down payments and take on more debt to purchase a home, and this trend is expected to continue.
WFH will continue to shape trends
In 2020, a large number of homebuyers wanted to purchase a property that would be conducive to working from home. While it’s expected that workers will begin returning to the office in 2021, working from home will still factor into trends. More workers will likely have flexibility to work from home as needed, and buyers will be looking for home offices, good Internet connections, and outdoor spaces that can be used for working. Proximity to other spaces that facilitate working remotely, such as coffee shops, cafes, and parks, will also be important.
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