Even though the Covid-19 epidemic has impacted every sector, maybe none has been hit as hard as the real estate market. A record number of individuals have purchased houses during the epidemic, spurred on by job and financial upheavals, the desire to remain at home, and cheap loan rates, even though the economy is in recession and unemployment rates remain high. And the upward trend is expected to continue until 2021. Although the real estate bubble has burst, it is far from finished. Here are important home buying trends to keep an eye out for in 2021.
Real Estate is Selling Like Pancakes
Homes are selling at a historic rate. During the Covid-fueled real estate boom, 42 percent of homes sold in two weeks or less. According to one study, the pandemic increased home buying for almost half of respondents. In San Diego’s competitive market, 55% of houses sell in less than a week, with an average of 20 days on the market. The record-breaking pace is excellent for sellers but bad for buyers. In many instances, prospective purchasers are outbid or pushed to make hasty choices. However, the record-breaking rate may decrease in 2021. Houses were flying off the market owing to a lack of availability, rising demand, and cheap mortgage rates. As supply and demand level out throughout the year, expect the competitive seller’s market to soften, but not drastically. That would be the highest level since 2005.
Millennials are increasingly purchasing homes, and Gen Z is approaching the age when they want to buy a home. Thus market demand should remain stable until 2021. The good news for purchasers is that 2021 will be less hectic. Typical home-buying seasons were thrown out the window in 2020 due to the epidemic. When things return to normal in 2021, expect a spring and summer rush of purchasers, followed by a winter slowdown.
High Demand, High Prices
The increase in home buying comes amid financial stress and rising unemployment. So although many individuals are purchasing houses, they are not necessarily spending money. The epidemic prompted 63 percent of homeowners to cut their budget by $28,400 on average. At the same time, 66% of purchasers backed out owing to financial constraints. With record-low mortgage rates, buyers can still purchase more houses than a year ago. Interest rates are expected to remain low throughout 2021 but will begin to rise later in the year. Buyers or those planning to purchase in the future several years are increasingly moving up their schedules to maximize their funds.
Budget constraints are influencing homeowner preferences, causing the development in less costly areas. Buyers on a tight budget may look for houses below their budget to make an offer over the asking price. While individual budgets are shrinking, markets as a whole are growing. In addition to this, you need to consider good quality insurance, too. That’s why it’s best to look into a reliable house or condo insurance quote. It’s easy to tell that demand increases house prices. Between April and June 2020, almost one in four purchasers spent $500,000 or more, up from 14% in the prior nine months. Experts anticipate a 5.7% rise in house prices in 2021.
Rise of Suburban Popularity
Remote employment has driven individuals out of cities and increased suburban home buying. Suburban house sales have grown faster than urban home sales, and many purchasers are prepared to commute when they return to work. In the suburbs, buyers are more likely to discover desired features such as bigger homes, dedicated office space, personal outdoor space, and access to beaches, trails, and open space. The suburbs will continue to flourish in 2021. Aside from cities, many individuals flee high-tax regions. The ultra-rich fleeing high-tax parts will impact their cities. Others may follow their lead to benefit from reduced taxes, mainly because remote employment allows individuals to work from wherever and money is short for many.
As a result of the COVID-19 epidemic, the housing market has seen notable increases in recent years. The price of a home rose, increasing the demand for buyers, while mortgage rates plummeted to all-time lows. It’s fair to say that, after everything is said and done, housing has proven to be one of the few bright spots during a bleak period. There are patterns in the real estate market and trends in the housing market, but they change with time. This industry is highly localized, and with all the many circumstances present in each city, state, and metro region, it is impossible to assume things will remain static for long. To stay on top of these ever-changing trends, knowing the basics of the market will be invaluable.