We are all hoping for a better year in 2021 than we had in 2020, but when it comes to real estate, the pandemic’s effect on home buying and selling will likely remain positive for the housing market. The trends that we saw driving the homebuying rush will continue into the new year as will the popular trends that shaped real estate in 2021.
Here are the factors expected to impact real estate and some of the up-and-coming markets to watch this year.
The arrival of the vaccine
With the roll-out of COVID-19 vaccinations reaching all corners of the US, we can expect to see more home sellers, who were deterred by social distancing, becoming more comfortable with listing their homes. HomeLight’s Q4 Top Agent Insights Survey found that 50 percent of agents believe the vaccine distribution will encourage more sellers to enter the market. This will open up more inventory later in the year as it currently remains low.
Low mortgage rates remain a constant
The same survey found that 68 percent of agents reported that low mortgage rates have pushed consumers to buy a home sooner than expected. This includes renters looking to purchase, homeowners trading up, and some opting to downsize earlier than they had planned.
Commercial business closures driving away homebuyers
Unfortunately, with many businesses closing due to lockdowns last year, homes in commercial areas are struggling. Homeowners used to flock to these areas for their proximity to restaurants and businesses, but that’s changing quickly, with interest decreasing in these once desirable areas.
Second homes on the rise
According to the Second Home Sentiment Report for Q4 2020 by Pacaso Homes, second home purchases have increased by 20 percent compared to pre-COVID numbers. With more people working remotely, second homes offer homeowners the chance to work in different environments, like possibly poolside or near the beach.
Urban dwellers flee for the suburbs
This trend is not new. Even before the pandemic homeowners were expected to shift from urban areas to the suburbs due to changing age demographics. However, last year definitely sped up the process, seeing more people in search of affordable housing and larger spaces outside city centers.
Seeking small-town charm
The same is true for those looking to get out of cities entirely. Many small towns across the country are seeing a huge influx of newcomers, like Star, Idaho, the fastest growing city in a state that saw 194% more people move in than leave since March. Again, homeowners are in search of places with larger homes for cheaper prices.
The draw of warm weather is a major factor driving the geographic shift of homebuyers. The restrictions from the pandemic had people, especially those who lost their jobs, reassessing their priorities in a home location. Cities all along the sunbelt are seeing a serious increase in new residents.
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