We wanted to share some insights with you regarding the housing market as we enter 2021, and give you a good feel for where the market is heading. Based on this information, we also will share with you some tips and insights if you are a buyer or a seller in todays housing market.
First and foremost, we want to give thanks to the brave men and women who are out on the front line; our first responders, healthcare workers, medical personnel and support providers. Secondly, we ask all to continue to practice safety and social distancing during this national emergency.
This is part of an on-going series of real estate articles by Nick Santoro and Joe Santoro of Personal Property Managers ( www.personalpropertymanagers.com ) who service Pennsylvania and New Jersey and specialize in real estate, home content downsizing, senior transition services, property management and estate sales.
So, let’s take a quick look at the facts:
- By all measures the housing market is exploding.
- There is more demand than there is inventory.
- Houses are selling well over list price and are selling much faster than in the past.
- In fact, house prices are up 12% full year 2020 vs 2019.
- Houses sold 40% faster in 2020 than in 2019. So, the availability for a buyer to preview a house is much shorter as is days on market with many homes going under contract within the first two days, with multiple offer and many above asking price.
- Mortgage rates are at historic lows, with current rates under 3%
- With the advent of more people working remote and working from home there is an exodus from the city to the suburbs where there is more space when working from home.
So, now that we have shared the current trends, where are we heading in 2021 and what you may wish to do if you are a buyer or a seller in todays housing market
Here is our list of 6 predictions for the housing market in 2021. They are:
- The combination of several viable COVID-19 vaccines and the promise of an economic recovery suggests the strong housing trends that emerged in 2020 will continue in 2021.
- However, tight supply and strong housing prices present affordability challenges, so homebuyers may confront a slightly different landscape in the months ahead.
Housing supply will be tight despite new construction
- As we enter 2021, homebuyers can anticipate a continuation of tight housing inventories. The uncertainty associated with the pandemic has stalled some new home construction. The U.S. Census Bureau found housing starts in the latter part of 2020 to be almost 13% above 2019. New home construction has not been sufficient for the rising housing demand. However, if signs of a strong economic recovery emerge, inventory may start to normalize in the latter part of 2021. Builders could resume previously delayed projects. In addition, slowly increasing mortgage rates and rising home prices may curtail some of the demand.
Home sales growth will be higher than last year
- According to many industry experts annual home sales growth will be the highest in 40 years in the United States at an estimated 21.9%.
- The pool of potential homebuyers has increased, in part due to the pandemic. In particular, millennials are looking for first homes or trading up in housing size due to their desire to leave the major cities and find space for growing families.
- A recent survey from Realtor.com shows those who think it's a 'good time to sell' now outnumber those who think it's a 'bad time to sell', 48% to 44%, respectively, for the first time since the pandemic started, any additional housing inventory that has come to market has yet to dampen prices.
Rising mortgage rates may temper housing demand
- Economists foresee the record low mortgage rates of 2020 slowly increasing. According to Realtor.com, mortgage rates will be closer to 3.4% by the end of this year. The 30-year fixed mortgage rate currently hovers around 2.875%, so the expected increase is almost half a point. Therefore, rising mortgage rates may impact the number of people able to afford homeownership, but mortgage interest rates are still extremely attractive and at or near historic lows. Some researchers argue that demand for new homes will stay healthy for the foreseeable future as buyers weigh the financial burden of renting versus purchasing, especially in major cities. Then on top of this you’ll need to factor in more and more people working remotely from home, which will further impact the demand for suburban housing.
Residents will continue to leave major cities for the suburbs
- With many companies announcing a shift to flexible working arrangements, people are relocating outside of many major cities, such as New York, Philadelphia, Washington and Chicago. Where there was once a shortage of rental units in these major cities, now there are thousands of vacant units.
- Low mortgage rates and the shift to remote work from home has accelerated the suburban migration because families have the flexibility to move. As a result, high-tax cities will see their tax revenues decrease substantially, forcing city services to be cut dramatically as people migrate to areas with lower living costs.
Remote work will drive the demand for more space
- Just as in all major events we have faced, short terms shift in our daily lives now become the new norm. After vaccines have been rolled out to the masses and we transition back to what life was like prior to the pandemic, many things will remain in this new norm. We’ll see shortened in-person work weeks, more digital collaborations, and hybrid learning environments.Â New homebuyers are looking for houses that support work and learning from home. Larger families, as is the case in Europe, may reconfigure themselves so more generations can coexist in the same space.Â Kids will continuously adapt their learning environments to hybrid or remote learning models. More time in and around the home means homebuyers will look for features like home offices, multi-purpose living spaces, spacious backyards, and walkable communities.
We hope that the facts that we shared with you give you insight into what is happening in the housing market and where it’s headed. We would like to conclude by sharing some insights if you are considering selling your home, and how to take advantage of recent trends, and we would like to also share some thoughts with you if you are considering buying a home. They are:
Tips for home Sellers:
- Virtual tours and home videos are an absolute must for today’s buyer who want to preview a property before going outside or even considering it
- Clean, clean, clean and then declutter your home. This is especially important now as more and more people are viewing homes in advance via videos, so clean out countertops, closets, garages and rooms in general is very important. You want to give an impression of largeness, cleanliness, and openness
- Take advantage of your down time to spruce up your house. Do the simple things that make a big difference like a fresh coat of paint, sprucing up the front entrance to your home, trim the lawn and shrubs and make your house as inviting as possible. Remember that buyer money may be tight so you will want to do as much as you can so that a buyer will little to do when moving into your house which saves them time and money and makes your house more attractive. For more information, please see our link on the profile of todays buyers and sellers.
- Price your home to sell. With this being a buyers’market and credit tight, properly pricing your home is critical. Work with your Realtor to do a detailed comparative market analysis to help you. Sellers will need to factor in that amount of work that may be needed on their house to bring it up to todays buyer trends and price their home accordingly. In other words if a sellers house may need a new kitchen because it is dated, that could cost between $20,000 and $75,000. A bathroom could cost between $5,000 to $25,000. So if you are looking at some online sites that offer a rough ball park for your home valuation, a seller really needs to dig much deeper to determine a homes true value. More info can be found in our article on the importance of a comparative market analysis.
- Vacant homes are more desirable for buyers today, because the risk of germs is greatly reduced
- Neutral colors. 98% of buyers today want neutral color as opposed to bold colors. Remove wallpaper and boarders. 79% of buyers prefer the light gray colors that are so popular today
- Make sure that you are pre-approved for a mortgage before house shopping
- Mortgage interest rates are very low and near historically low levels.
- Deals. There are plenty of deals out there for eager home sellers, so take advantage of this if you are pre-qualified
For more insights, tips and videos please visit our Resource Page in the About us tab.
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For more information on real estate or home downsizing please contact Nick Santoro or Joe Santoro
of Personal Property Managers at 215-485-9272
. Personal Property Managers specializes in helping home owners transition from their home of many years into a new community. Personal Property Managers services Pennsylvania and New Jersey and offers downsizing services, estate sales services, home staging, discount full service real estate services via its association with EveryHome Realty
. Learn more about Personal Property Managers from our recent News Stories
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