Well, it goes without saying that 2020 was a heck of a year that none of us were expecting. It was the curveball we didn’t see coming and the year brought many challenges and surprises to us all. One of those surprises was the real estate market’s resilience, as most of us hunkered down and braced ourselves for a crash. While the COVID-19 global pandemic did disrupt real estate sales last spring—typically the hottest season for real estate—the residential market made an impressive rebound toward the end of 2020, making up for the spring market losses.
We’ve all made changes to adapt to the “new normal” most of us expected not to be so permanent. But as time goes on, it seems the pivots we’ve made will have a lasting effect on the way we live, work, and do business. And while we’ve learned the hard way to expect the unexpected, we have compiled some of the trends we think we’ll see in real estate for 2021.
Real Estate Trend #1: Low Inventory for Home Buyers
If you’re looking to buy a home, you’ll stand a much better chance in a buyer’s housing market, where there is a greater supply of homes and a lower demand of buyers—not to mention most of the negotiating power.
Seller’s markets, on the other hand, are on the opposite side of the spectrum. Homes sell faster, and buyers face more competition and must act more quickly than usual to snag their dream home. In most cases, you’ll have a more difficult (and more expensive) time finding a home.
Housing inventory was incredibly low in 2020. For perspective, inventory was down 22% in November 2020 compared to the previous year. According to experts, it’s likely this trend will continue in 2021, resulting in a seller’s market.
Tips for Buyers
Whenever there is a limited supply of houses on the market and a wealth of interested buyers, time is of the essence. If you expect to enter the market in 2021, you can do a few things to have a better chance of scoring a new home.
Get Preapproved for a Loan ASAP
Getting preapproved for a mortgage before you go house hunting gives you confidence during your search, shows sellers you have your finances in check, and are serious about buying their house. Most importantly, it puts you on the fast track to closing. In a market with a limited home supply, not doing this legwork ahead of time gives a preapproved buyer free rein to take the home you want right out of your hands.
Expand your Search
If the location where you’re planning to buy is too competitive, expand your search and look in a less popular neighborhood. You might be surprised by what you find.
Sacrifice some Wants
If you can’t find your dream home, be willing to give up some “nice-to-haves” for your “must-haves”. Don’t settle in too many areas, but think about which areas you can upgrade over time.
Real Estate Trend #2: Low Mortgage Rates
Last year was a wild year for the mortgage industry, with rates hitting record lows numerous times. The average rate for a 15-year fixed-rate mortgage dropped to 2.31% in November 2020—the lowest rate since Freddie Mac started reporting roughly 30 years ago.
The good news is that mortgage rates expect to fall even further in the early months of 2021 before rebounding in the latter half of the year as COVID-19 vaccinations lead to a surprisingly strong surge of economic activity. The National Association of Realtors (NAR) expects mortgage rates to average 3.1% in 2021, up from 3% in 2020. The Mortgage Bankers Association says rates will average 3.3 percent in 2021.
Low-interest rates make home-buying more affordable; just be careful not to let low rates pressure you into buying a house before you are ready.
Real Estate Trend #3: Technology Real Estate Trends are Growing
Technology continues to revolutionize the way we function in society today. And new technology is no exception in real estate. A home buyer can not only initially scope out a potential real estate investment on sites such as Zillow but can also almost go through the complete transaction process virtually.
The Coronavirus pandemic may have sped up a transition to virtual open houses that was already underway. Ten years ago, virtual tours threatened to cut real estate agents out of the real estate buying process, but now it’s the real estate industry that embraces them. Virtual tours give agents a competitive advantage, offering buyers a quick, high-quality 360-degree tour from their couch and freeing up sellers and agents’ time by dissuading buyers who may lose interest after the initial tour. Sellers want fewer buyers traipsing through their home anyway, pandemic or not.
Until recently, the actual real estate closing has remained a stubbornly paper process in an increasingly digital world. Many real estate transactions are using online notarization and electronic signature apps to streamline the virtual closing process. Mobile closings are pandemic-friendly and dramatically reduce post-closing processing times. A win-win!
Online Repair Estimates
After the home inspection is complete, it is typical to have multiple tradespeople visit a property to estimate the different repairs needed. Usually, this results in high-traffic in a house (Yikes! – Not ideal during a pandemic), numerous appointments on different days, and an unforeseen cost of getting those home repairs done. But thanks yet again to technology, there is a better way. Agents recommend a contactless approach to their clients.
With companies like PunchList, agents and their clients can upload the inspection report online and receive a repair estimate back within 1-2 business days without contractors visiting the property. After the repair estimate is customized to their liking, a team of contractors will come out and complete the repairs within a few days.
This one-stop solution helps agents work smarter, simplifying one of the most complicated parts of the home buying and selling process. Now, more than ever, it’s helping revolutionize the home repair process by making it faster than ever and ensuring fewer people come into the home.
Ready to try it out for yourself? Claim your free 1-day repair estimate below: