To say 2020 was a challenging year for the economy is wholly understated. So many things have happened across the board in the past year, with real estate being no exception. Health experts across the world theorized what this pandemic could mean not just for the population’s health and safety, but also for other sectors. Real estate in particular, has seen its slew of ups and downs that no doubt contributed to a change in housing trends and property market behaviors.
Sure, the pandemic did have a hand at disrupting residential property sales in early 2020 — which many consider to be the peak season for real estate — however, the market was sure to recover and displayed a quick rebound. Many experts in the real estate industry have actually expressed hope for both the housing and commercial sector, with house sales actually skyrocketing nearing the end of last year. This may not be enough to make up for all the income losses that investors were met with due to the pandemic, but it was definitely enough to make up for the market losses during spring.
Like you, many investors, stakeholders, tenants, first-time homebuyers, and many more, are probably wondering about the forecast for 2021. Will the market be able to survive and thrive in the current economic market? Will business owners become more comfortable about investing in brick and mortar structures? Whatever burning real estate questions there may be for the year 2021, these are definitely some of the trends to watch out for. Check them out!
Less Options For Homebuyers
This may be one of the hardest pills to swallow not just for investors, but families or individuals who are looking to buy a property for the first time. Let’s face the facts — there will be less options for homebuyers due to the incredibly low inventory. To put things in perspective, housing availability on the market was actually down by 27% in the first few months of this year compared to last. Simply put, there just weren’t many houses going for sale in order to satisfy demands of buyers and investors.
What will this mean for buyers? If you’re one of them, this means that you have to act fast wherever you go house hunting. If you find a property that satisfies your standards, then your best bet is to immediately find a broker that can strike a good deal with the seller. House selling speeds are also at an all-time-high. A small inventory meant that many homes during the spring of 2021 sold much more quickly compared to the past few spring seasons.
Can’t find the home of your dreams but in dire need of a roof over your head? Then you may want to consider making compromises. Stick to the basics and try finding a nice enough property that you can afford and upgrade later on in the future.
Rising House Prices
With fewer houses in the market and high demand, property sellers might have more leeway in their pockets to be liberated when putting a premium on land and property. In the early months of the US alone, home prices rose by almost 20% with an average selling price of more than $300,000. For sellers, this is definitely an encouraging statistic. However, buyers shouldn’t be quick to be dismayed — there are still a few things that can be done.
If you’re planning to buy a house this year, then you have to act fast and start planning on a budget in mind. Determine the price that you can really afford, basing it from your current financial situation and status. Once you’ve got all of that covered, you have to commit to it. Don’t try to feel pressured by other homebuyers who’ve crossed out a few boxes in their property checklist. Stay true to what you want and be smart about planning your finances to fit the housing market status.
Here are a few tips that you can use to make sure that you get your hands on a property you want this 2021:
- As much as possible, you have to set a house payment limit to 25% or less than your monthly take-home pay. This will also cover aspects such as interest, principal, property taxes, insurance, private mortgage insurance (PMI), or HOA (homeowner’s association fees) when living in a gated community or equivalent.
- For your down payment, try to save at least 15% to 20% to help you avoid a PMI. Anything less than that and you’ll be surprised with the amount of extra fees and skyhigh interests that you might accrue.
- When applying for a loan, try to stick to a financing company that provides you with a fixed, not variable, mortgage. The trouble with adjustable rates/variable mortgages is that while your loan payments may have a chance to decrease, you might be charged too much for extra fees and interest. Skip this and opt for the more predictable and manageable fixed loan.
Popularity Of Online Real Estate Services
While vaccine rollouts have begun in many parts of the world, there are still some countries struggling with containing cases of the COVID-19 virus. For aspiring homebuyers in these locations, this could mean looking out for other alternatives in purchasing properties, doing house tours, and coordinating with real estate brokers.
Another trend that will likely continue until late next year is the rise of online real estate services that allow investors to be a part of virtual or remote real estate interactions. Tons of real estate platforms will be developed, as brokers and dealers try to meet demands when it comes to property purchases.
Buyers are not just limited to typical property listings found online, as online real estate services take this up a notch. With just a few clicks and scrolls for example, one could already tour a property they’ve been eyeing for some time. They won’t have to make physical house tours that aren’t only high-risk, but time-consuming and inconvenient.
Other online real estate solutions even offer third-party buying services. Homebuyers may still be wary of this since these third-party companies will definitely end up selling property at a markup. But, it is wholly convenient for sellers — they won’t even have to do the job of inspection, documentation, processing, and house tours. Most of the legwork is done by the third-party provider looking to make home buying and selling easier for their clients.
Listed above are just some of the key housing trends for 2021 that investors should understand. For some, the predictions may not fare well. Homebuyers are met with slim inventory choices when it comes to choosing and buying property. Sellers, on the other hand, may have trouble keeping up with the housing demand.
Whatever it is, there’s no questioning what the persistence of the pandemic has meant for the housing sector. Ultimately, the property market will continue to showcase volatility. The highs and lows will ever be present and it’s up to investors and those involved in the real estate industry to play their cards right and act with prudence.