2020 saw the world changed. People were unemployed, businesses shifted to a remote basis, and the housing market saw the strangest series of fluctuations yet. On the one hand, housing prices went up, which ties in with the lower mortgage rates. However, renting went down, and other little surprises.
All of this raises the question, what will 2021 bring to the market? Things are looking up compared to 2020, but that doesn’t mean the end is in sight. While jobs are coming back, they are not returning at the rate many would hope or expect. Some positions may not come back at all.
What will this mean for the real estate industry? What investments will be the safest, and which will be the ones to avoid?
Given how the housing market stalled for much of last year, many experts are assuming that we will face higher demand for houses this year. There will be more people seeking houses – but theoretically, fewer people willing to sell. This will create a natural supply and demand curve.
Decline In Affordability
One of the predictions is two sides of the same coin. It is expected that houses will be valued at a higher price than even a year ago. This will give current homeowners a boost while decreasing affordability for those without the same options.
Mortgage Interest Rates Are Still Low
With the average mortgage rate still being relatively low, there will be a continued trend towards buying. This will connect directly to the boom in millennials buying their first homes. Experts predict that the percentage will continue to stay at a record low throughout 2021.
The Effect of Remote Work
One would assume that the increased availability of remote jobs would decrease the need to move to the city. However, experts believe that this assumption will prove incorrect. While some families will opt to move farther away from the city with this new freedom, many others will still prefer to move closer to available infrastructure.
Short Term Versus Long Term
Ingo Winzer theorizes on Forbes that there will be an increased demand in rental housing – in the short term. However, the article does go into great detail about how the long term will prove to go against that trend. So plan wisely.