What’s Next for Real Estate? A Look Into 2021 and the Future of the Industry

2020 is a year unlike any other. The Covid-19 pandemic has completely altered our way of life and had profound effects on the real estate industry throughout 2020. With so much changing right now, how will the real estate industry be different (and the same) in 2021? The future of real estate will almost certainly be as interesting as 2020.

As our economy slowed to a recession, our real estate industry was invariably hit by big changes. At the beginning of the pandemic, this manifested in lower-than-ever mortgage rates and a major shift to home buying habits. Suddenly, new homebuyers were foregoing densely packed urban areas and shifting to more rural settings with lots of open space. As more and more people searched for a home in 2020, housing inventory plummeted… while home prices shot up.

In addition, we all adapted to a new way of buying and selling homes in 2020. What other changes does the future hold for the real estate industry? Here are our predictions.

The Power of Digital

With more people choosing to stay at home to limit the spread of Covid-19, the real estate industry has largely shifted online and into digital avenues. It’s easier than ever to find a home, apply for a mortgage, tour a property, and sign paperwork completely online.

An influx of new tech startups and companies are beginning to offer digital products that will make every aspect of the home-buying and -selling process easier. Property websites like Zillow, Trulia, Properties Online, and more have an unlimited amount of options for customizing your property search to find exactly what you’re looking for.

Limit Physical Contact by Moving the Purchasing Process Online

You can even search for a mortgage online and compare different lenders with ease. Online lenders are often faster and less expensive than traditional lenders, and as we head into 2021 you’ll find even more options for finding the best loan—with the best rates—for your new property.

However, as you shop online for a home—and a mortgage—you should always exercise caution and do as much research as possible.

Shifting Priorities for Homebuyers

Many new homebuyers are turning their sights from busy metropolitan areas to calmer and more suburban communities. As Covid-19 has largely sent us indoors and away from other people, space and comfort have become huge priorities for homebuyers in 2020.

According to Fannie Mae Senior Vice President and Chief Economist Doug Duncan, the shift is fueled by fear of disease and population density. Construction is working hard to capitalize on these new demands and we’re slowly seeing a rise in family starter homes throughout the country.

However, that rise cannot keep up with current demand. Even as we head into winter, which is traditionally seen as a calmer real estate season than the busy spring and summer seasons, competition is so fierce that home buyers have to act quickly in order to buy their dream home.

The Rental Industry Will Remain Strong

Now more than ever, people are prioritizing flexibility over purchasing and owning a property. It makes sense—people are working from home, leaving their city apartments, and even moving back in with their parents. Fewer people want to be stuck with a hefty mortgage in case the uncertainty of the current economy doesn’t settle down.

Projected Mortgage Rates & Housing Prices

Industry experts predict that home prices will continue to rise as they have for much of 2020. Buyer competition is heavy and current inventory just can’t keep up. As of early November, the weekly housing market trends showed that the median listing price for properties is growing by 12.9% compared to this time last year.

Mortgage rates have inched downwards throughout 2020, and the average U.S. mortgage rate for a 30-year fixed term loan is at its lowest point in 50 years, 2.72%. If these mortgage rates stay low into next year, that will be a valuable incentive to first-time homebuyers in the U.S.

Looking for Resources to Better Understand the Real Estate Market?

Tryon Title is here to help. Whether you’re planning to purchase a home next year or simply doing your due diligence, your goals are important to us. Please contact our team today for more information and assistance as you navigate the 2021 real estate industry.