It’s the time of year for my annual real estate market prediction for the coming year. First of all I want to say that this has been a difficult and strange year for all humankind. Life as we knew it is no more, we have changed the way we do everything – work, play, congregate, visit, travel. Many wonderful lessons have come from the ashes, but many people have lost jobs, homes and most importantly, loved ones or friends, colleagues or acquaintances to the Coronavirus.
As we head into 2021 there is hope that life will slowly return us to some normal patterns, so that we can plan and dream again.
In the midst of all this craziness the real estate market continued to do well, and sales were off the charts. Home prices continued to climb and with inventory low, they kept climbing. Many homes sold in days with multiple offers – ask any real estate agent and s/he will be able to tell you stories from the real estate trenches of 2020.
Here are my thoughts on what we may see next year in real estate (all are interrelated):
1. Prices are not coming down any time soon. Although we are overdue for a market correction I do not think we will see prices come crashing down when the market does correct. Inventory is still low and interest rates are crazy ridiculous. There will be demand for homes and until we see a surge in inventory or experience an economic crash or continued massive shifts in employment/unemployment prices will remain high.
2. Demand will continue for a time and many people will be moving. People who have been working from home and/or have kids schooling from home for 9 months now are realizing they need more space to work. Open concept floorplans, although popular, are not working for those who need space to separate work from home life. Many people will look to purchase homes that fit their families and new home lifestyles better. On another note, many people will move out of state, with some states seeing what feels like a mass exodus. We are already seeing that now.
3. Inventory will slowly rise. As a result of number 2 above, we will see inventory rise eventually. Many homeowners have sat quietly and watched neighbors sell their homes for outrageously high prices. Stuck at home for many months, many of those potential sellers have cleaned up, fixed up and remodeled their homes. We will likely see an inventory increase come Spring. If so then we will see prices cool off a bit, but it will all depend on how much inventory we see and whether demand continues.
4. Mortgage rates will remain low, and may even go LOWER. Until there is a mass-produced safe vaccine for COVID the economy will suffer from businesses closing and people losing jobs. In response and in order to stimulate the economy the federal government will continue to keep the rates low. They may even drop, possibly to zero, and it is possible we may see some new time frames for average 30 year mortgages (Japan introduced a 100 year mortgage years ago and their housing market flourished).
No matter what happens in 2021 it can’t get any more bizarre than 2020. While this has been a difficult year for many people it has brought out good and kindness in our hearts, has taught us that even when times are bad love is most important, and made us more aware of our neighbors and others in the world who are not as lucky….and hopefully opened our hearts to helping those less fortunate. Happy holidays and happy New Year to all of you.