The pandemic triggered an economic recession that had residential real estate experts wondering about the future of the housing market. But mortgage rates dropped to a record low and is expected to stay low in 2021 as the economy recovers. Add this to the fact that more people are relocating and buying homes because of the flexibility of remote work. It seems like residential real estate trends are looking up.
Homeowners who planned to sell their home and move to a new community before the pandemic can finally get their plan moving. It’s time to replace that old AC unit, schedule that furnace repair service, replace the wallpapers, and update the landscaping. Home sales are expected to increase next year. In fact, American homeownership is expected to reach 70% by the end of 2021.
New home builds and suburban and rural areas are also expected to increase.
Here’s an overview of the 2020 housing market predictions.
Mortgage Rates Will Remain Low
Economic recovery won’t happen overnight. The COVID-19 outbreak occurred almost a year ago and vaccines have already been created but that doesn’t mean life immediately returns to normal. Redfin projects 3 -year fixed mortgage rates will rise from 2.7% to 3% in 2021. This isn’t a large enough difference to deter people from buying a new home because the total rate remains relatively low.
Given that the rise of mortgage rates and overall prices for residential properties will be slow next year, the industry can expect greater home sales. There will be more listings on the market as well.
More Americans Will Relocate
Many people live in major cities like Boston, New York City, and Seattle because of their jobs. Real estate prices in urban core areas are noticeably higher than in suburban locations. But given the way remote work became a post-pandemic norm, more people are relocating to more affordable cities. The real estate industry will see more Americans crossing county lines and settling in cities like Cleveland and Pittsburgh.
Industry experts expect the cross-county migration of over 14.5 million Americans in the coming year. This will be the highest relocation percentage in the country in over one and a half decades.
More New Homes Will Be Built
Many people will be relocating to other cities in 2021. Homeowners might renovate their current property before putting it on the market. In addition to this projection, there will be an increase in new home builds next year. Building permits were already up 21% in Fall 2020 compared to the same time in 2019. Construction will increase due to the lower cost of labor, material, and land because of the pandemic.
In line with this, the American homeownership rate is expected to reach 70% for the first time in a decade and a half. All of this is partly due to the fact that remote work allows people to abandon the property they’re renting in expensive cities in favor of their first home in nearby, more affordable cities.
Video Tours Will Be More Popular
On to the tech side of things, more house tours will be done via video walkthroughs. Real estate agents can pre-record these house tours and prepare a 3D scan of different parts of a residential property. Or they can view the home while on a video call with the buyer. Either way, virtual tours will continue to be popular as a COVID precaution, for convenience’s sake, or both.
On a related note, more real estate agencies will transition into a one-stop-shop for homebuyers. This could include home trade-ins, cash offers, mortgage, insurance, home warranty, and moving solutions.
Given these trends, 2021 is looking like a busy year for residential real estate.