The COVID-19 pandemic impacted the real estate market in 2020, and residual effects are still felt in 2021. From the housing inventory dropping by 39% to houses staying on the market longer, these trends made some believe the market would never recover.
The good news is that this is not the case. If you want to know what to expect and some of the top real estate marketing predictions 2021, keep reading. Here you can find everything you want to know.
1. Plenty of New Home Buyers Will Appear
At the beginning of 2021, real estate agents were encouraged by the number of buyers actively seeking a home to buy. In fact, in several housing markets, the buying potential was considered high or super high.
This is a trend that is expected to continue in the foreseeable future.
2. Higher Lending Standards
In 2020, loose mortgage lending practices devastated some of the biggest banks and mortgage companies in the U.S. This forced federal regulators and Congress to make huge adjustments that are now considered the “norm” regarding lending regulation.
Since this time, standards have been raised, and acquiring a mortgage is now much more transparent. The “anyone can get a loan” mortgages are considered illegal. Borrowers must undergo intensive asset and income checks.
Also, a new regulatory agency, called the Consumer Financial Protection Bureau, has been created. This agency has the task of enforcing the new regulatory framework in place. If a lender is not compliant with the standards, they will face significant penalties.
Because of this, the current housing finance marketplace is much safer and more robust than it was in prior years. If a dip occurs in the housing marketing now, it will be cushioned by the stricter regulations established.
3. Rental Prices Are Down and Housing Prices Are Up
The rental and housing markets experienced unique impacts in 2020. Prices are continuing to go up in the housing market, and demand (and, as a result, prices) falls in the rental market.
If you are renting, you may find it is becoming more and more difficult to not only find but keep tenants. At this point, you may want to read this article to figure out if it is time to sell.
While the cost of homes for sale is growing overall, this increase is slower in metro areas. The market saw cost declines in April and May, but the prices went back up after that.
Around the country, the average home spent about 65 days listed for sale between January and October. This is two days less than in October 2019.
In October 2020, the cost of rent in the 100 biggest counties was still under the rates seen before the COVID pandemic. Now, the larger units are reaching the pre-COVID levels. However, studios are still declining.
Now, workers who were laid off because of the pandemic can no longer afford the higher rent costs. As a result, some people are opting to work from home and leaving the densely populated areas.
This is happening in some of the most highly populated cities, like San Francisco, Chicago, and New York.
If you want to continue being successful in the rental market, you need to use new technology. This will help you meet with clients, handle transactions, and show your listings virtually.
4. Foreclosure Rates Will Go Up
It’s expected that 225K to 500K homeowners in the U.S. may face foreclosure in 2021. This is more than what is considered normal.
For perspective, experts have predicted that during spring 2021, foreclosures will double compared to that time the previous year.
The increase is related to job losses caused by the pandemic. What homeowner can keep up with their mortgage payments after they lose their stable job and income?
For home buyers, foreclosures are not all bad. In fact, because of this, you may be able to find a great deal.
However, just remember that it will likely come with potential problems if you purchase a foreclosed home. Be sure to do your due diligence to ensure you know everything that may be wrong with the house before buying.
5. The Homeowner’s Equity Cushion
Equity refers to the difference in your home’s current market value and how much you owe on it. Put simply, it is the part of your home’s value you possess and own.
Having equity may be an incentive for you to remain in your home longer. If prices go up, which is something that is happening across the country, your equity goes up, too.
You may wonder why this matters. The fact is, with more equity, you are cushioned from default if your home value falls.
Over the past 10 years, homeowners in the U.S. have seen stability in growth. This has helped them build up larger home equity reserves. In the end, this may help you significantly.
Now You Know Real Estate Market Predictions 2021
As you can see, the real estate market has a few twists and turns coming in 2021. Keep these real estate market predictions 2021 in mind to know what to expect.
While there are no guarantees about what will happen, the predictions here will help you prepare for what may happen.
If you are looking for more help with real estate and the housing market, be sure to check out some of our other blog posts. Our team is dedicated to all things real estate and will ensure you have the information you need to make informed decisions.