What to Expect for the 2021 Housing Market 2020
2020 is finally coming to a close (thank goodness). With the end of this chapter brings on excitement for the next, but what is in store for 2021? The uncertainty brought upon by the pandemic has left people wondering if this next year will be a good time to enter a real estate transaction. Will the housing market crash? Will we head into an economic recession? There are a lot of questions out there and although we certainly cannot predict the future, we did our best to forecast what the 2021 housing market will look like based of off current market patterns and trends.
The housing market in 2020 followed a V-shape trajectory and has since remained strong despite the pandemic. With the rise in coronavirus cases, unemployment rates and a looming economic downturn, the housing market took a slight dip in March 2020. People were reluctant to enter the market with the uncertainty of what lied ahead, and the fear of the market crashing similar to how it did 2008. However the market was pretty quick to bounce back and continues to remain strong as we head into the last month of 2020 (Business Insider).
Limited supply of houses available drove up the median price per home in 2020 and is expected to continue in 2021. For the last 5-10 years there has been more buyers then there has been homes for sale. This is nothing new. Due to limited inventory we saw a double-digit price growth in the market in 2020 (ATTOM Data Solutions). Since inventories will continue to be relatively low, we do anticipate a continually rise in growth rate however, it is expected to remain relatively steady this next year. The forecast for 2021 is for the median home sales price to rise by 5% to 6% and for the overall number of homes for sale to continue to decline (Global Property Guide). However, the rate of decline should slow, as the economy bounces back, and confidence is gained for sellers to enter back in to the market. The housing market in 2021 will look a lot more normal than in 2020.
What about demand? Will it remain as strong in 2021 as it was in 2020? We should see normal levels of demand in 2021. Buyers are still looking to take advantage of the low mortgage rates, however it is predicted to be comparatively normal, as it will be spread throughout the entire calendar year. Rather than having a “make-up” period like we did this year from people who stopped looking during the lockdowns in early spring.
Trends regarding the home buying and selling process that will continue throughout 2021. People are finding ways to adapt to this “new” normal. We have seen a huge increase in listings that have virtual tours as well as live-streamed open houses. This not only allows for proper social distancing but it also grants access to a much wider geographical population of people. Currently in the state of Utah, houses are staying on the market for an average of 9 days; virtual tours are an easy way for non-locals to stay competitive. We are also seeing a trend in people moving away from major urban areas into suburbs. People are looking for affordability and space. This was happening way before the pandemic but has started to steamroll as more and more companies are giving the option of full-time remote work. Bottom Line. We cannot predict the future and every state, city and neighborhood is different. If you want the best advice and insight on what’s happening in the current housing market where you live, contact us at the Red Sign Team and we will pair you with an agent!