Reduced housing inventory, potential homebuyers moving to the suburbs, construction and tenant affordability issues may affect the course of 2021.
The COVID-19 pandemic that occurred for most of 2020 has led to unexpected real estate market results. After the initial short period of downturn in home sales, as people sought more space, ideal housing functions, and affordability for the rest of the year, homebuyers’ activity greatly exceeded the available housing in most parts of the United States.
Now, with the hope of widespread use of the COVID-19 vaccine, extending the time at home is changing people’s daily lives, as well as what they need at home and where they want to live outside the pandemic.
In 2021, there will be some trends in the housing market:
- Interest rates are relied upon to remain low but will gradually rise.
- The average house price will rise.
- Despite a large number of new buildings, housing inventory will remain low.
- Buyers will continue to focus on the suburbs.
- Renters who have been financially damaged by the pandemic will continue to struggle and need rent assistance.
This is an expert’s forecast for buyers, sellers, renters, and new houses in 2021.
Many areas are seller’s markets, which means there is not enough housing to meet the demand for active housing buyers. David Sigman, executive vice president and head of LCOR, a New York-based real estate investment, development, and management company, said that many homebuyers who leave the city for the suburbs might eventually take this action. With people’s expectations that the rate of housing construction increases and the pent-up demand after the initial pandemic is closed, experts expect sellers to benefit in 2021. But buyers should not worry about finding a house.
As the market is expected to remain favored by sellers throughout 2021, Samalin said “her company focuses on helping buyers navigate the home buying process to help them avoid emotional distress in the face of fierce buyer competition.” For homebuyers who are still worried about job stability, postponing home purchases may be the right move. However, during the pandemic, lenders have proven that they are willing to cooperate with borrowers facing unemployment or expensive medical expenses to avoid future foreclosure crises.
A significant factor leading to the lack of housing supply on the market in the second half of 2020 is that many homeowners now choose not to relocate, especially if they are already attending school in houses with enough space for telecommuting virtualization.
Realtor.com chief economist Danielle Hale said: “They usually switch to buying houses in the same market.” “In the end, they will not lead to a net increase in inventory.”
However, the expected price increase may attract some homeowners to sell. The impact on the personal housing market will vary greatly. Talking to a local real estate agent can help you learn more about your area’s housing prices and activities.
Of course, with the pandemic waiting for the vast majority of people to get the vaccine, the pandemic continues to leave room for uncertainty.
the rental market is far less significant than that of the homeowner market. Compared with the 80.4% of households who paid all or part of their rent on November 6, this is a significant drop. By the end of November, 93.6% of households had paid all or part of the rent, so the proportion of tenants who paid rent in December can be expected to rise before the end of the year. On December 21, Congress passed a new coronavirus relief plan that will provide $25 billion in rental assistance and postpone the deportation order issued by the Centers for Disease Control and Prevention until the end of January 2021.
Surge, “Although the imminent rebound in the rental market is good news for some, it will certainly put millions of tenants who have been hit hard by pandemic-related income losses in a more vulnerable position and may require the government intervened further to avoid painful waves of evictions.” The pandemic has also affected how many apartment communities are approaching their amenities. Public spaces, including swimming pools, roof terraces, and rest areas, have been popular in apartment communities for many years. Still, apartment owners and developers are studying how these public areas can meet more workers’ needs in remote areas while allowing privacy that individuals will want.
“Our demand for comfortable spaces will increase,” said Simon Aftalion, Markwood’s development director. “Large spaces can be divided into smaller, more private environments… directly adjacent to outdoor elements.”
New Construction and Development
The answer to the high demand for home buyers is to build new houses. To make these houses meet the space requirements, many people look for them after a year of work, study, and leisure.
Fortunately, home builders seem to be facing the challenge. The U.S. Census Bureau reported that over 1.54 million houses started or construction in November this year. The new house construction rate was 1.2% higher than in October and 12.8% higher than the housing rate that began in November 2019.
Looking forward to 2021, home builders are expected to continue to expand new construction. As per data from the United States Census Bureau, building permits issued in November indicate close to 1.64 million planned buildings that have not yet begun construction. Realtor.com predicts that housing starts in 2021 will increase by 9% compared to 2020.
Even if builders’ activity continues to grow, most housing markets can still expect the number of home buyers to exceed available homes’ inventory. Fleming said: “I’m pretty sure you can’t build it fast enough.”
You can put popular household functions that are indispensable in the trend to your top priority for all new buildings. In particular, at least additional rooms or corners for semi-private remote work and school spaces will be the main focus, while outdoor spaces will make personalized outdoor life easy.
Aftalion said that in apartment buildings in the denser areas of Los Angeles, private outdoor space had become the focus of attention, including when the square footage is limited, “even if it means the size of the unit (smaller interior), as long as you can work and make a Zoom call so that it is blocked, the sun is not on your face, and next to your (apartment),” he said.
Although the construction of new apartments and condominiums planned for 2021 will continue, the public’s shift in preference for a suburban environment means that you won’t see many builders eager to start planning more multi-family houses in the city center. At least-until, the housing market becomes clearer after the pandemic.
Sigman said: “We expect this growth to slow down. I think there will be fewer apartment buildings starting in 2021 than in other years.”