During the second quarter of 2021, as extreme demand continued to crush the housing inventory, home prices soared nationwide. According to the National Association of Realtors (NAR), the median
Real Estate Trends 2021: What You Need to Know
Dated: January 25 2021
Real Estate Trends 2021:
What You Need to Know
2020 was a challenging year for so many in so many ways. With so much that happened across the country, you might be wondering how it’ll impact real estate trends in 2021.
While the pandemic did negatively impact home sales in the spring of 2020, the market quickly made a notable rebound. Some real estate experts have reported that the surge in home sales toward the end of 2020 actually made up for the earlier market losses.
Will we see more of the same outcomes in 2021? How will the housing market shake out in our current economic climate? Whether you’re selling, buying or staying put, here are some 2021 predicted real estate trends that you may find interesting.
Real Estate Trend #1: Slim Pickings for Home Buyers
Inventory has been incredibly low for some time now! For perspective, housing inventory was down roughly 22% in November 2020 compared to 2019. There just weren’t enough homes for sale to meet high buyer demand.
While every Market is different and there will be some areas more impacted than others, here is what I think you could expect if you enter the real estate market in 2021.
What Slim Pickings Mean for Buyers
Low inventory means you will need to be on your toes when you begin your house hunt—the best homes will be snatched up very quickly. In November 2020, more than 7 in 10 sold homes were on the market for less than a month. That doesn’t leave much time to hesitate when making an offer. If you want to Buy a home in this slim market, here’s some advice:
- Sacrifice some wants. If you can’t find the house you want, be willing to give up some “nice-to-haves” for your “must-haves.” Find the least expensive home in the best neighborhood you can afford and upgrade over time.
- Expand your search. What if the location where you’re planning to buy is too competitive? You might be surprised at the treasure you can find in a ‘less popular” neighborhood. Working with a real estate agent who is familiar with the area is the best way to find a home that fits your budget and lifestyle.
- Get preapproved ASAP. Getting pre-approved for your mortgage before you start your home search is a must in any market. But in a market with a limited home supply, not doing this preparation ahead of time gives a preapproved buyer a huge advantage to snatch up the home you want right out of your hands.
What Slim Pickings Mean for Sellers
Low inventory means low selling competition! You can probably expect to see offer letters flooding your mailbox, but do not let this prevent you from doing your homework on your market. It will be especially important to hire an experienced Realtor that can navigate the many offers you are likely to receive. They will be able to help you determine the “Best” offer, which is not necessarily the highest offer. Due to limited inventory, you will likely be in the driver’s seat!
But after your home is sold, you probably won’t be in the driver’s seat anymore (if you’re buying again).You will need decide on plans for your next home before you sell. Again, this is where an experienced Realtor will be crucial in planning before you list.
Real Estate Trend #2: Home Prices Are Still Rising
Next up: home price trends. In November 2020, existing home prices grew by a whopping 15% compared to last year—rising to a national median of well over $300,000! This marks more than 100 straight months of year-over-year price gains across the Country. Sellers, this should put a big smile on your face! And hang tight, buyers—we have some advice for you too.
What Higher Prices Mean for Buyers
If you’re going to buy a home in this market, you absolutely must find out how much home you can afford. Commit to staying within that budget amount no matter how much pressure you feel watching competitors pluck good homes off the market.
To feel confident about buying a home this year, work with a quality Mortgage Loan Officer to determine your buying power. You will need to crunch the numbers and figure out a monthly payment your budget can handle. Again, you will want to work with an experienced agent to find homes for sale within your budget.
For more help on buying a home in this crazy market, check out my free Home Buyers Guide. It has all the answers you need to buy a home with confidence.
What Higher Prices Mean for Sellers
A nice profit may be on the horizon! And that’s great news because you’ll really want that extra money when buying your next home. To get the best offer for your home, work with an experienced real estate agent who really knows your local market.
And be sure to wait for the right offer. Some buyers may try to gut punch you with a low number. If you aren’t in a hurry to move, wait for an offer that gives you the most profit.
Real Estate Trend #3: Mortgage Interest Rates Are Still Super Low
The average mortgage interest rate (that fee lenders charge as a percentage of your loan amount) has been historically low lately. In fact, the average rate for a 15-year fixed-rate mortgage dropped to 2.31% in November 2020—the lowest it’s been since Freddie Mac started reporting nearly 30 years ago! And now economist geeks think interest rates will continue to hover around 3% in 2021, which is still really low.
If you want to refinance or get a mortgage from a trustworthy lender who actually cares about helping you pay off your home fast, ask your Realtor for a referral, they will have first hand experience with the mortgage lender community.
What Lower Rates Mean for Buyers
Sure, interest rates are low right now—which can help with affordability. Just be careful not to let that pressure you into buying a house when you aren’t really ready. A super low interest rate on a house you can’t afford is still a bad deal. So remember to stick to your budget; monthly payment, down payment and mortgage type (see Trend #2) and you’ll be in great shape!
What Lower Rates Mean for Sellers
If interest rates stay low, buyers will be more motivated to buy your home sooner than later. But if interest rates do start to increase later in the year, just plan for your house to be on the market a little longer. If you don’t plan on moving anytime soon, you might still be able to take advantage of these super low interest rates and shorten your payment schedule by refinancing your mortgage.
Real Estate Trend #4: Online Real Estate Services Are Growing
No doubt you’ve heard of real estate services like Zillow that allow you to browse or list homes for sale online with the click of a button. But did you know that online services are now offering to buy and sell your house for you?
Here’s how it works: You tell companies like Zillow, Opendoor, OfferPad, etc. about the house you want to sell. They buy it from you, put a little money into it to resell at a higher price, handle all the home processing; i.e. inspections, repairs, and home showings, and then charge you as much or more than an agent commission for selling costs—plus, most of these companies include an additional service fee or “convenience fee”. They promise less hassle, but it may also mean less profit $$ for you than working with a top-notch agent who could sell your home for more money and with little hassle. Again, an experienced agent will make all of the difference!
Using a “Virtual” Agent
Hybrid services like Redfin aim to reduce traditional agent commissions by handling things online. This gives you partial services that are similar to working with an agent, but for a fraction of the cost. Think of it as a middle ground between selling with an agent and selling by yourself. But when selling a home, be wary of the middle ground. Your home is your biggest asset, and you get what you pay for!
Mobile or Online Closings
In related news, digital technology is also making it easier to handle document-based tasks virtually. For example, many home transactions are using electronic signature apps and remote online notarization to streamline the process. In other words, there’s a chance you can buy or sell a house this year without getting out of your car or ever changing out of your bathrobe and slippers.
What if I’m Not Buying or Selling a Home This Year?
You may be thinking, All this is great, but I’m not going anywhere anytime soon. I hear you, and here’s what you should know for now:
1. Equity probably won’t decrease through 2021.
With most housing markets at low risk for a downturn, Freddie Mac believes home prices will continue to rise in 2021—but at a slower pace of nearly 3%. This is still good news for sellers because you’ll likely make a nice profit when you do decide to sell. Continue to monitor your home’s value to make sure your equity (what your home is worth minus how much you owe on it) is going up. Your Realtor can help you with this by providing market updates that are tailored specifically to your housing market.
2. A real estate market crash looks unlikely.
With all the uncertainty behind everything that happened in 2020 and with home price growth possibly slowing down in 2021, you might be wondering if the housing market could collapse. Well, it’s impossible to know for sure, but economists suggest a housing crash is unlikely.
After all, the super low mortgage rates are motivating buyers to enter the market, which increases demand. But there’s still a very low supply of home listings. This is keeping home buying competitive and allowing home price growth to soar.
3. Regardless of your neighborhood, buyers are interested.
Since home prices have experienced rapid growth over the past few years, some buyers may be less choosy. In fact, determined ones might be willing to consider neighborhoods that don’t have easy access to highways or aren’t in close proximity to a big city. If you think you live in an less than “popular” neighborhood or believe your home isn’t what buyers are looking for, think again. Now may be your perfect time to consider selling.
Bottom line is 2021 is looking good for real estate. Talk to a professional Realtor today to better understand your Market.
Lisa Lowe is an energetic agent with EPIC Home Realty. Lisa firmly identifies with the EPIC identity: Excellence, Professionalism, Integrity and Candor. She considers continuing education for herself ....
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