What the Experts are Saying About the Housing Market Heading into 2021
There is no doubt that the continuing COVID-19 health crisis has sent the economy on an unpredictable ride. While some industries have floundered as a result of the pandemic, other sectors have thrived during these unprecedented times. The housing market has seen a mixed bag of results with the homeowners seeing the benefits at a far greater clip than the rental industry. What is most surprising is how the housing industry has weathered the storm of 2020.
Here is what you should be on the lookout for in the housing industry in the year 2021.
What to Expect for Buyers
The biggest factor driving the housing market this year has been the historically low interest rates. As the Federal Reserve raced to rescue a tanking economy by lowering interest rates, prospective home buyers took advantage of this opportunity to lock in record-low rates.
While the economy is expected to improve in the latter half of 2021 as the COVID-19 vaccine distribution becomes more widespread, it will take some time for interest rates to begin to rise again. This will continue to make it attractive to purchase or refinance.
In addition, the market is being fueled by families looking for more space during the COVID-19 era. As more people work and learn from home, many families are looking to upgrade their current living conditions. Home office space is in particularly high demand. Outdoor living space is also at a premium with more people spending additional amounts of time at home and entertaining in their backyard.
Another factor that is propping up the market is the proliferation of Millennials looking to buy homes for the first time. With more people telecommuting, there has been a documented exodus out of urban areas and into the suburbs.
What to Expect for Sellers
Real estate experts predict that it will remain a seller's market through 2021. The inventory of homes continues to be on the low side. This is attributed to buyers flocking to the suburbs, pushing inventory in these areas down. During the spring lockdowns, many cities and states halted new construction, reducing inventory levels even further.
Additionally, many homeowners who may have planned on selling during the year 2020 held off on this big decision because of the uncertainty of the economy. This means that individuals who needed to move were faced with a housing shortage. This is particularly true for people looking to relocate.
What to Expect for Renters
While the pandemic has not affected the housing market in significantly negative ways, the renters scene has been a different story. Renters have been far more affected by the closing of retail shops and restaurants as a result of the pandemic. Although most white collar jobs have been shielded from the economic impact of the pandemic, blue collar workers have not fared as well.
The ability of renters to make their monthly payments has been a growing concern during the pandemic, particularly as the additional federal unemployment benefits have run out. Temporary eviction moratoriums have helped to ease the financial burden for many tenants. However, these moratoriums are now scheduled to expire at the end of January on the federal level.
The good news is that most economists predict that the rental market will improve greatly as 2021 marches on. With Gen Z continuing to graduate from college in large numbers, there will be a greater demand for affordable rental properties. The younger generations are also creating demand for new amenities in the rental market space. Outdoor areas and common spaces are becoming increasingly popular as more people stick close to home because of the pandemic.
Be sure to remember that these trends apply to the national housing market scene. Individual markets may see varying degrees of these trends depending on the local economy.
It is also important to note that anything can happen during these uncertain times. This housing outlook is simply a prediction of what most experts believe will happen should the current conditions hold. The acceleration of vaccine distribution or a worsening of the pandemic may affect the housing industry in significant ways.
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