With the record-setting real estate boom of 2020, 2021 holds a lot of potential. The real estate market in 2021 has been booming so far. It is likely that you or someone you know purchased or sold property in the previous ten months. The COVID-19 pandemic heavily impacted all industries; still, real estate took a significant hit.
Disruption to jobs and finances, stay at home directives, and low interest rates facilitated these changes. A staggering number of people bought houses during the crisis despite a lingering recession and high unemployment rates. This trend does not appear to be going anywhere soon.
Key Home-buying Trends to Monitor in 2021
Record-Setting Home-Buying Pace
The pandemic-propelled real estate boom resulted in about 42% of all home listings in the US selling out within two weeks. Though this is a seller-friendly development, buyers suffer from getting outpriced in the competitive market.
Projections show buyers having a better time in 2021 as supply and demand begin to balance. Zillow estimates that 6.9 million existing home sales will occur during the year. This figure is the highest since 2005 while the 21.9% one-year gain in sales surpasses all others since the early 80s.
Millennials are buying houses at an ever-increasing rate, and Generation Z are approaching home-buying age. This suggests that the property demand will persist in 2021 and the future.
Altered Budgets, Increased Prices
Strangely enough, this surge in property buying comes at the height of high unemployment and financial difficulty. This peculiar situation caused 63% of homebuyers to go for property lower than their average budget of $28,400. In line with this setting, 65% of buyers decided not to follow through with their purchase. Budget was a major reason.
When low budgets are paired with low interest rates, they still get buyers more deals than what was obtainable in the previous year. It seems likely that interest rates will remain low in 2021, although it should start rising by the second half of the year. Due to low budgets, houses in less expensive areas are getting attention resulting in growth.
Individuals are reducing their budgets, but demand is raising the home prices. About 1 in 4 buyers from April to June 2020 spent $500,000 or more, a 14% increase from the same statistics nine months before that.
Emigration from Cities and High-Tax Regions
The transition to remote work has driven people away from cities, hiking the suburban housing market. Home sales in suburban areas have seen more growth than those in the cities, with an increasing number of people being willing to commute to and from their workplace. Suburbia offers homebuyers highly desirable home options, such as dedicated office space, personal outdoor space, closeness to trails, beaches, etc.
Apart from cities, people are also choosing places with lower taxes. Elon Musk, who just overtook Jeff Bezos as the richest man in the world, recently relocated along with the headquarters of SpaceX to Texas (no income tax) from California (highest income tax). Others who made similar moves include Tom Brady (Miami), Larry Ellison (Hawaii), and Doug Merritt (Texas). Others are expected to follow in these footsteps.