It’s safe to say that 2020 threw everyone for a loop. The coronavirus pandemic has impacted the lives of billions of people worldwide, and perhaps the most surprising element of all has been how COVID has supercharged the U.S. real estate markets rather than upended them.
“This has been a strange year. But there has been a lot of good in this year too,” said Brian Buffini, founder and chairman of Buffini & Company, at this year’s “Bold Predictions: 2021 Real Estate Market Outlook,” which was held as a virtual webcast on Dec. 8.
Buffini was joined by National Association of REALTORS® (NAR) Chief Economist Lawrence Yun, who provided a summary of the last year’s market events, as well as some predictions for what’s to come.
“The housing market has shown remarkable resiliency in 2020—and 2020 is certainly a year of surprise on many fronts,” said Yun.
Amid the pandemic, the economy faced a high unemployment rate, low mortgage interest rates and a shortage of inventory. But what U.S. residents feared the most was that the virus could bring about another Great Recession—something we don’t have to worry about, according to Yun.
“It’s different from the Great Recession,” Yun said, pointing out that the biggest indicator that this is something else is in current lending practices. “We don’t have subprime lending that’s giving out mortgages to just anyone.”
Overall, Yun said he felt confident that home prices would maintain their stability throughout the pandemic, but he did not anticipate that prices would soar, “particularly in the second half of the year.”
What might the future hold? Yun predicts that home sales could be 20 percent higher in the third and fourth quarter compared to the prior year. Additionally, he sees home sales rising more than 5 percent, possibly 10 percent, in 2021, as a vaccine becomes available and possibly leads to faster job growth with still favorable mortgage rates, which should stay near 3 percent.
Yun also anticipates home-buying trends to continue moving toward their current shift from open floor plans and smaller homes to larger homes with more segmented spaces.
“Because of work-from-home flexibility, people are suddenly realizing they are not content and are looking for a larger home with possibly an office space,” said Yun. “Agents should contact their prior clients, as they may be willing to hear what you have to say even if they were not considering buying or selling before the pandemic.”
Buffini emphasized there are three things that will affect the market in 2021:
“People are moving into the suburbs and beyond. One of the greatest indicators is what renters are doing.”
2. The Changing Face of Relocation
“Remote workers are on the move. Between 14 and 23 million plan to relocate due to working remote.”
“People want high-speed internet, kids’ classrooms, more rooms, etc. We’re going to have even more competition in the move-up market.”
Buffini said that for next three years, as interest rates stay low per the Federal Reserve’s guidance, real estate professionals should put in extra efforts and make sales, even buying the very assets they sell.
“Eventually, we are going to have some sort of inflation. And what’s the greatest hedge against inflation? An asset—real estate is the greatest one,” said Buffini.
Both Buffini and Yun will be providing tips for the year to come, as well as an economic update, at RISMedia’s “Real Estate’s Rocking in the New Year,” co-presented by NAR and being held virtually on Jan. 7 from 11 a.m. to 5 p.m. EST.
Click here to register for a 50 percent discount! All registrants will receive a complimentary digital copy of RISMedia’s “Ultimate Team Guide” as a holiday giveaway ($50 value).
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to email@example.com.
Thank you for a great update article. This aligns with what we are experiencing here in Arizona.
I wonder if the Pandemic caused an articulate shortage of inventory.
sellers who wanted to sell and move decided to postpone. also, with the eviction ban by both lenders and landlords, inventory shrunk.
I think when the pandemic lifts due to vaccine, inventory will build up faster than sales rates, putting substantial downward pressure on prices.
Housing market continues to be hopeful for the rich. Leaving the rest of us to struggle to find new homes in places we can afford. I hold two degrees, and being forced out of the town in which my family settled in over a hundred years ago.The lack of rentals due to the pandemic are also forcing prices to skyrocket. So as your precious house prices continue to rise. So does the number of the homeless population.
How will the increased house sales prices affect real estate taxes? Are the ssle prices artifical and will reflect artifical real estate taxes? As you are aware, when values drop off, taxes continue to escalate. How will t his trend lead to increased foreclosure?
People in our area area moving out east.35Ac into Modulars And we are seeing people buying land and having old Trailers hold to it for a total remodel. Its exiting to see a reclaim of structures to be brought back to live pluse our market is outpacing first time home buyers. With Acerage they can have horses, chickens ect the children can learn farmming with nature and school on line A shift in lifestyle is hear. I personally think this is great.
Very strong information, well done. Thanks
I have been reading how great the real estate market is doing now and for the coming year. Millions of renters are losing their apartments. Mortgage delinquencies in California is 6 times last year. That is just one state. How can anyone think that all those unemployed mortgage holders who will lose their unemployment will make the 2021 real estate rosy?? I see a glut of properties whose property values will go down in price and all real estate values go down for those not late on their mortgages and therefore, the mortgage market call in their mortgages to have these holders pay the difference in the depressed values and demand a new mortgage loan at a higher rate only if they pay the loss of value upfront!! This happened in the 1970’s. Property A had a loan of $250,000 but its value was now $200,000. The customer had to pay the bank $50,000 immediately and obtained a new mortgage at a higher rate. I can’t tell you how many people cashed out pension funds and borrowed money from their parents just so they wouldn’t lose their homes! I don’t think 2021 is going to be good for everyone!!
I agree with Claire Hood.
Too many people losing jobs that wont be able to pay the mortgage.
Next year will be the last good one and then a steady decline. 🙁
The little ripple becomes a big wave. We are in a asset bubble, the us has had hyper inflation for years. Yes money is cheap but at a higher price why would I buy a home. Why not take the higher rate at a lower price and be able to pay the home off sooner.
Home sales this summer were equivalent to hoarding TP. The US is in a artificial economy and a large asset bubble. How do you think states will pay for all this debt. Raise Property Taxes is a easy one now….