The real estate market has proven to be resilient even through the worst of times – the pandemic and economic downturn in 2020 being perfect examples. But if there’s one thing that folks who are entering the market (whether they are selling or buying) can do to best prepare is to familiarize themselves with 2021 housing market predictions.
Housing Market Predictions for 2021
If you’re looking to buy a home right now, you might be asking yourself, “Is it a good idea to buy a home during COVID-19?” We’ve reviewed the HomeLight Q4 2020 Top Agent Insights Survey and here are seven key takeaways that we feel will be the most important things you’ll want to pay attention to.
#1: Inventory shortages
One of the key factors that will have a huge impact on the real estate market in 2021 will be a shortage of inventory. Of the agents who participated in the survey, 84% said the inventory is lower than expected even though there is an increased interest in new construction builds. But, despite the lack of inventory, 81% of agents are optimistic that the market will improve as the year goes on.
You can use what we learned during 2020’s abnormally hot housing market to guide you through another unprecedented year of real estate.
#2: Consumer confidence reliant on vaccine distribution
At the start of the pandemic, sellers were reluctant to put their houses on the market because they were afraid of the possibility of getting infected. Thanks to the promise of millions of coronavirus vaccines being distributed across the nation, 50% of agents say sellers are more confident to list.
#3: Foreclosures and evictions will be inevitable
With the mortgage forbearance set to expire at the end of January 2021, 40% of agents are predicting an increase in foreclosures in their markets. It isn’t just homeowners who could face homelessness. Millions of renters could face eviction once the eviction moratorium ends in January too.
#4: Low mortgage rates will continue to drive demand
For those who have the means to buy a house, 2021 would be a perfect time to do so. Mortgage rates have reached all time lows throughout 2020 and 97% of agents say the low mortgage rates will be a huge factor for people looking to buy. But, it’s worth noting that 34% of agents are predicting mortgage rates will increase as vaccines are distributed and economies improve.
#5: Remote work encourages more moves
Across the nation, businesses that have employees who can work from home to do so. Real estate agents from the Pacific Coast (19.8%) are expecting permanent remote work will spark mass relocations. On the flip side, only 8.3% of agents in the South Central region say remote work is least likely to be a factor for folks to relocate.
#6: Industry will be prepared for virus surges
Throughout 2020, the real estate market saw a steep decline in seller activity. In 2021, real estate agents believe that the need to adapt in 2020 has prepared them if there’s another wave. Agents have implemented tools such as virtual tours, relying on digital closings, and remote showings to keep business going as close to normal as possible.
#7: Joe Biden’s first-time buyers tax credit could help affordability
The United States has always had a problem with affordable housing and in Homelight’s Q3 2020 survey, the majority of agents say tax breaks and incentives will be a big problem in 2021. President-Elect Joe Biden has put forth an affordable housing plan where first-time homebuyers could get a $15,000 down payment tax credit. This credit is just extending the temporary tax credit from the Recovery Act, but it is expected to be permanent and buyers can use that credit when they actually buy a house instead of waiting to claim it on their taxes. Pretty sweet, right?
The real estate market is a fickle thing and we’re lucky to have top-selling agents sharing their insights regarding the future of the market. These predictions aren’t set in stone, but they’re a great jumping off point!