While moving against the general economic trends in 2020, the housing market made great gains throughout the year. Demand for new homes is strong and the average cost of new home purchases is high as the year ends. According to the experts, 2021 should start with the upward trends of 2020 and remain positive throughout the year. Below are the 2021 real estate market outlooks from some of the leading experts in the field.
In the plainest of terms, the real estate market will stay active through 2021 as low interest rates continue to sweep the market. In the words of Draper and Kramer Mortgage Corp.’s Chief Executive Paul Lueken, “The Federal Reserve will continue to support a low interest rate environment for much of 2021, and mortgage rates can be expected to remain low for most of the year. Home sales will therefore stay strong due to the low interest rates and the recovering economy.” In the same phrase Mr. Lueken explains that the purchasing rates across the real estate market are likely to reach pre-pandemic levels by the end of 2021. This highlights a steady growth across the market for the coming year.
While examining metro areas, many of which have lost population due to population density concerns during the pandemic, Gary Acosta, the co-founder and CEO of National Association of Hispanic Real Estate Professionals, states that “…home prices in New York and California [wil] flatten with modest price declines in Manhattan and San Francisco.” While this may seem like potential bad news for investors from the perspective of ROI, such a decline will make acquiring properties for fix and flips or redevelopment even easier. This same decline in market prices should also fuel an increased interest in homebuyers in these metropolitan areas.Second-tier cities like Austin, Charlotte and Tampa will experience a residential building boom.” Jarred Kessler, CEO of EasyKnock
“As companies announce plans to allow employees to permanently work remotely, high-tax cities will continue to see a talent drain as people relocate in search of cities with a lower cost of living. Second-tier cities like Austin, Charlotte and Tampa will experience a residential building boom.” Jarred Kessler, CEO of EasyKnock explains. While some cities such as Tampa have already begun to see this influx of renewed interest due to lower property prices, Mr. Kessler expects this trend to be fueled further in the post-pandemic market. Due both in part to lower taxes and higher square footage of properties, previously less exciting cities are anticipating a boom in both sales and new property construction.
CoreLogic’s deputy chief economist, Selma Hepp, contributes “[F]irst-time home buyers will remain a strong force in the market as the largest cohorts of Millennials are turning 30 – critical household formation years. But also, the oldest Millennials are increasingly contributing to the trade-up market. As a result, 2021 home sales activity is expected to remain strong and outpace 2020 levels.” As previous generations remain well nestled in their homesteads, the aging Millennial generation is increasingly seeking buying opportunities. While Dr. Hepp highlights the older side of Millennials, it is also important to remember that the 25-29 age demographic are also seeking their first home purchases in the wake of a highly abnormal year. Those with the proper buying power will be seeking to sow roots in modest homes for their small families.
Unlike many other markets, real estate has stayed a hot investment opportunity through the trials of 2020 and seeks to remain an active environment through the 2021 calendar year. Alongside low interest rates, new opportunities in previously slow markets, and new ground being broken in mid-range cites, 2021 is anticipated by many to be an exciting year across the real estate market’s many facets. To arrange fast, easy financing for your investment in the housing market, please contact us.