If you’re a prospective home buyer, you’re likely tired of hearing that the current housing market is a seller’s market. On the other hand, if you’re a prospective home seller, you’re likely wondering how much longer the seller’s market will last so you can list your home before it is too late to maximize your profit. While vaccinations are rolling out across the country, the fatigue from the COVID-19 pandemic is still eminent. Despite that, as the summer months unfold, many are optimistic that there is an end in sight to not only the pandemic, but also this seller’s market. So, what will the housing market become? Below, we share 5 real estate trends for the remainder of 2021 to educate your home buying, or selling, decision.
1.) City life will begin to regain popularity, but buyers will remain focused on purchasing property in the suburbs.
Last March when offices across the country first began to shut down, many city dwellers opted for a temporary relocation to the suburbs. As companies begin to determine what a return to the office will look like, many former city occupants are looking to leave their remote destination to return to their city life.
As reported on CNBC, Redfin’s Chief Economist, Daryl Fairweather, shared, “For all the talk of an urban exodus, the housing market in cities is as hot as we’ve ever seen it, especially for single-family homes…There are plenty of buyers out there with deep pockets who are coming out ahead financially during the pandemic.” Many city residents are looking at the possibility of owning multiple properties, or properties with an easy commute, to still hold onto that city life.
2.) While interest rates will remain relatively low, they will begin to slowly increase.
With the pandemic, the market saw record-low mortgage rates that made prospective buyers want to speed up their home search despite the uncertainties COVID-19 brought. It seemed like the time was now to buy.
For instance, the Home Buying Institute shared that during the first week of 2021, the average rate for a 30-year fixed mortgage loan fell to a record low of 2.65%! However, since March they have slowly risen and are predicted to continue to steadily rise as we approach 2022. As the rates increase, the pool of prospective buyers will be limited, and the housing market will begin to transition away from a seller’s market.
3.) Home inventory will begin to increase, but for now, it will still be a seller’s market.
This may change as the year unfolds, but for the immediate future, the market will remain a seller’s market since the supply in many cities remains low. According to US News, low interest rates, the continued creation of new households across the country, and a desire for more space have continued to drive demand through the roof. Therefore, there aren’t enough homes available to match the number of active buyers (in March 2021 there were 52% fewer homes on the market than March 2020!).
Additionally, many homeowners chose not to relocate during the pandemic and instead decided to stay put. Now with an end in sight for the pandemic, many potential sellers feel ready to relocate. However, Real Trends notes this will be a slow increase in inventory. Because most home sellers are also looking to buy another house to live in after they sell.
4.) On the other hand, if you’re looking for a brand-new home, you’ll likely have to wait a little bit longer.
To end the seller’s market, there need to be more homes for sale. Builders were unprepared for this housing demand and due to the pandemic, many were laid off or their companies were terminated. When it comes to building, the price of lumber and other materials increased drastically. Due to all of this, the price of a new home became an added expense of over $26,000 according to the National Association of Home Builders!
While there is still a deficit of about 900,000 homes available for purchase, as estimated by Ivy Zelman, CEO of Zelman & Associates, there is an end in sight. According to the U.S. Census Bureau, in February there were building permits authorized for 1.68 million privately owned new housing units in the country, up 17% above the February prior!
5.) Given the slow transition to a buyer’s market, there will be a rise in single-family rentals.
The rise in single-family rentals has already been evident with the pandemic because there was a lack of houses to purchase. The pandemic impact on renting was far less than the buying market, so many prospective buyers opted for another year of renting. Millennials are also opting to rent for another year to save money to purchase as the market cools down and more and more companies have also begun to build homes specifically for renting.
And for those who were affected by the pandemic due to stores, restaurants, or their workplaces shutting down, the U.S. Centers for Disease Control and Prevention is extending its rental assistance to eliminate eviction worries.
These are 5 real estate trends that we see for the rest of 2021. But, know this, the seller’s market won’t last forever though, and the market will recover in time.
Lantern Real Estate Group stands ready to help you navigate your home buying or selling journey. Just because there is a pandemic doesn’t mean you can’t buy the home of your dreams!
Visit Lantern Real Estate Group to chat with us today!