Challenging is an understatement to describe 2020. With so much happening all over the world, it affected lives and businesses across various industries, particularly real estate. Although the pandemic initially halted home sales in the spring of 2020, it bounced back rapidly.
The surge in home sales continued towards the end of 2020. This, in fact, made up for the losses experienced by the real estate market during the earlier months. The question on everyone’s mind now is: will the housing market trend be the same in 2021? Let us find out.
#1: Market Will Be Competitive
According to the National Association of Realtors, inventory was down to 22 percent in November compared to the previous years. This means that housing demand is high, but there are not enough houses for sale in the market. In less than a month, over 7 out of 10 houses were immediately sold.
With low housing inventory, home buyers need to act quickly when house hunting. It could be that your ideal house will be off in the market in a bat of an eye. Rather than being picky, you need to sacrifice some of your “nice-to-haves” for “must-haves” so that you can still snatch the best home in the market.
#2: Home Prices Will Continue Rising
While housing inventory has dwindled in the last few months, home prices will continue to rise this year. In fact, home prices in November 2020 grew by 15 percent as compared to the previous years. This is good news for sellers, though as median home sales rates are expected to rise by 5 to 6 percent.
If you plan to buy a home during this time, you must find out how much exactly you can really afford. No matter how pressuring it is to watch other buyers plucking the best homes off the market, committing to stay on your budget helps, you avoid getting into deep financial troubles along the way.
#3: Mortgage Interest Rates Are in Their All-Time Low
The average mortgage interest rate is still at its all-time low, making it the lowest since 30 years ago. During November 2020, the average rate for a 15-year fixed-rate mortgage went down as low as 2.31 percent. It is anticipated that in 2021, the interest rates will continue to hover around 3 percent.
Now is the most opportune time for homebuyers to start hunting for their dream house. Nonetheless, buyers need to make sure they stick to their budget and get pre-approved by the best mortgage lender. Even with a super-low interest rate, buying a house is still a bad idea if you cannot afford it.
#4: Online Real Estate Is Trending
Like other industries during the height of the pandemic, the real estate market also adapted to the digital trends. Real estate services, such as Zillow, are now available online. Now, all you have to do is browse over listings and check the houses’ features up for sale.
Some online real estate services even offer buy-and-sell services, apart from offering virtual tours for eager home buyers. Even closing sales has become much easier with digital technology. Now, you do not even have to get out of your house or change clothes to buy or sell your house.
#5: Risking Home Buying Options Are Accessible More than Ever
Risky but creative ways to purchase a home are trending nowadays.
Some sellers offer rent-to-own-agreements. In this type of arrangement, the buyer agrees to rent the house for a specific amount of time (whether several months or years) before becoming an owner.
Although rent-to-own agreements allow you to bypass the time it takes to save up for a downpayment, you have to handle all the home repairs and maintenance yourself apart from paying a more expensive rental rate.
Another risky home buying option is procuring personal loans to fund one’s downpayment.
Financial experts advise that it is never a good idea to buy a home without money to finance your down payment. It could leave you in deep financial trouble in the not-so-distant future, and it can even hinder your chances of qualifying for a mortgage.
#6: The Rise of Suburbs Will Continue
With the increased number of employees working from home, suburbs will continue to be a popular housing option among Americans. With an affordable yet wide space and an attractive community, the real estate market will see a rise in demand for suburban homes.
The real estate business is most likely to continue adopting digital trends even when the COVID-19 pandemic dies. Digital tools make everything much easier for both buyers and sellers.