In 2020, just as the spring market was heating up, it was unceremoniously brought to a standstill by the shutdowns and precautions associated with the COVID-19 pandemic. Since then, both buyers and sellers have seen a host of ups and downs that added up to one of the most active, and in some ways frustrating, real estate markets on record.
Now, as we approach the first-year anniversary, what can you expect from this year’s spring market and how will it differ from last year’s—especially since many parts of the country are still more or less shut down? Here are a few predictions to help you prepare for whatever comes next.
Interest rates will stay low.
Throughout 2020, one of the primary drivers of the robust housing market has been historically low interest rates implemented as part of an early effort to boost the economy. The good news for buyers is that these low rates are expected to continue throughout 2021 and perhaps beyond in order to support post-pandemic economic recovery. That should keep buyers motivated while homeowners with no plans to sell may want to explore refinancing and home equity loan options, if they haven’t already done so.
Inventory may experience an upswing.
Low inventory has led to an almost unparalleled seller’s market, with buyers scrambling for the opportunity to participate in bidding wars in almost every major market across the country. Now, however, as vaccinations become more widely available and the market promises to return to somewhat normal, many previously reluctant sellers may decide to cash in their record-setting equity gains and put their homes on the market sooner rather than later.
Virtual tour options are here to stay.
Virtual tours were an early response to the inability for homeowners to play host to groups of potential buyers and to travel restrictions impacting out-of-town home searches. However, many homebuyers have found that they prefer the convenience of shortlisting properties through virtual home tours, while sellers enjoy the advantage of showing their home without an open house. Along with virtual transaction management, this looks to be one innovation that will become common practice even after the pandemic is over.
Multiple offers will continue.
At least in the short-term, multiple-offer situations will continue to be a feature of the home-buying experience. With inventory currently at record lows, it will take some time to catch up with buyer demand. In particularly hot suburban markets, buyers looking for multiple home offices and larger outdoor spaces will continue to drive demand with bidding wars for the most desirable listings.
Multifamily homes may see a rebound.
Having initially been abandoned in the first days of the pandemic, multifamily condominium and co-op communities are poised to rebound for a couple of reasons. First, as low inventory in the single-family market leads to frustrated homebuyers, many may choose to set their sights on the condo sector instead. Second, urban neighborhoods that were less desirable should see an influx of new residents as the pandemic comes under control.
Urban markets should make a comeback.
Prior to the pandemic, many college graduates and young professionals were priced out of the hottest in-town neighborhoods, suffering long commute times or the less appealing job opportunities found in secondary markets. While some urban dwellers are still looking to work from home in a more rural setting, others will be eager to take their places and enjoy the social life that urban spaces provide, especially after more than a year of social distancing restrictions.
Work from home offers the ability to live anywhere.
Newly permanent work-from-home policies mean that many professionals and their families can suddenly avoid the congestion of the city in favor of multiple home offices and larger outdoor spaces in the outer ring of suburban metropolitan areas and rural hideaways. This promises positive economic growth in parts of the country largely bypassed by hot real estate markets, along with an infusion of new commercial investment for years to come.
New home demand is on the rise.
One of the most popular responses to the frustrations of low inventory has been a shift to new home construction. This offers buyers the opportunity to buy in markets that they may previously have been priced out of and to design the home of their dreams rather than getting into a bidding war over whatever is currently available. However, while new homes offer a more reliable end product, timelines may be stretched by construction delays caused by COVID-related shutdowns and labor shortages.
The spring market may be a thing of the past—at least for now.
Just like in 2020, outrageous levels of demand and the gradual rollout of vaccines may mean that the spring market continues long past spring and well into the second half of 2021—and even beyond. With low interest rates poised to continue and a rebounding post-COVID economy, there’s no reason that the red-hot real estate market should cool off any time soon.
Unprecedented times and market conditions call for the best professional expertise. Whatever your real estate plans and goals for the next year, sit down and consult a trusted local real estate professional to take advantage of the facts and insights that they can provide. That will allow you to plan ahead and make the most of the opportunities that arise, both now and in the future.