Published April 1, 2021
7 Key Trends Expected To Shape Real Estate in 2021
While we still haven’t emerged from the coronavirus pandemic that upended the real estate industry—along with, of course, every other aspect of our lives!—in 2020, the housing market in 2021 isn’t going to be just a repeat of this past year.
In fact, while the housing market is predicted to be just as strong, if not stronger, as it was in 2020, there are some significant and positive changes that real estate agents are expecting to see. Here are 7 trends that are expected to shape the real estate industry in 2021.
Boost in consumer confidence thanks to the vaccine rollout.
While home buyers were very active last year, inventory remained quite low as many potential sellers delayed listing their home as they didn’t feel comfortable allowing strangers in for showings.
As the vaccine becomes more widely available, however, top real estate agents predict that more people who’ve been waiting to sell their home will go ahead and list. This will lead to an increase in the low inventory that buyers have been faced with for the past year, although it won’t happen overnight.
Suburban regions become more appealing.
One unsurprising effect of the pandemic is that many city dwellers who have the ability to move are showing increasing interest in lower-density environments—in short, the suburbs.
The appeal of more space, fewer people, and greater affordability is also partly due to a year of spending so much time in our homes. Plus, as more homeowners see that remote work is here to stay, having a home that offers space to both live and work is becoming ever more important.
Low mortgage rates continue to drive up buyer interest.
When mortgage rates dropped to a record low of 2.67 percent in December 2020, real estate agents reported seeing renters speed up decisions to purchase, older adults decide to downsize sooner, and more homeowners begin the search for larger homes.
Most agents expect this trend to continue, although they also expect that rates will begin to rise as the vaccine rollout continues and the economy begins to improve.
Agents must truly reckon with social and racial inequity.
The social and racial justice upheavals of 2020 have irrevocably impacted the American consciousness, and according to PwC, the real estate industry is no exception.
70 percent of respondents to a PwC survey on housing market trends believed that real estate agents could help address and end racial inequity. The industry is responding by evaluating its efforts to develop low-income and affordable housing, as well as looking into supporting job training programs for diverse and minority candidates.
Inventory will remain low, but slowly increase.
2020’s historically low inventory won’t change overnight, but agents do expect to see inventory numbers begin climbing as the vaccine becomes more widely available. This could depend largely on geographic region, as areas that have more access to vaccine distribution may well recover first.
President Biden’s first-time buyer tax credit will take center stage.
With job loss and other economic challenges stemming from the pandemic depressing so many Americans’ bank accounts, President Biden’s proposed $15,000 down payment tax credit will spur many first-time buyers to take the plunge.
Affordability will pose challenges to younger and first-time buyers.
One reason the aforementioned tax credit is such a big deal is that affordability will be one of the biggest challenges facing homeowners in 2021.
Due to lower inventory, prices have climbed steeply since March 2020, when the pandemic began. This is making it more challenging for home buyers to purchase, even though interest in moving has been driven by the switch to remote work for so many Americans.
