Key Real Estate Metrics
|Housing Indicator||2021 Forecast|
|Home price appreciation||5.7% increase|
|Mortgage rates||3.2% average; rising to 3.4%|
|Existing home sales||7.0% increase|
|Housing starts||9% increase|
|New home sales||5% increase|
|Homeownership rate||Rise to 65.9%|
The 2021 National Housing Market Forecast and Predictions from Realtor.com is subtitled “Back to Normal” for good reason. Seasonality did not play a part in the 2020 home buying season. However, 2021 is expected to show a return to seasonality, with strong sales in spring and summer, and slower sales in fall and winter.
The home-buying season is expected to slow a bit from the record paces in 2020. The past year saw pent-up demand from a missed spring buying season combined with record-low mortgage rates lead to a strong seller’s market. Buyers faced low housing inventory, high prices, and in many cases bidding wars. For most real estate market trends in 2021, the underlying housing market demand will consist of:
- Millennial and Gen-Z First-Time Buyers
- Millennial and Older Generation Trade-Up Buyers
Inventory remains the housing market’s Achilles heel. Following the shortfall of over 4 million new homes in 2020, the upcoming year will still see inventories at relatively low levels. This is due in part to continuing strong buyer demand. However, increasing new home construction and a rise in newly listed homes will help lead to increases in home sales.
What's Trending in Workforce Mobility for 2021?
Real Estate Market Trends Graph Results
- There is growing demand for different housing (different from one’s current circumstances due to remote working)
- Urban to suburban
- More home offices
- More private outdoor space
- While this trend might hurt urban markets (in the short and medium-term) – There is an entire spectrum of wants/needs that can be satisfied in almost any market:
- People with one-bedroom homes may be looking for two bedrooms for the sake of an office
- People in the suburbs may be looking for more rural
- To some city dwellers, a patio or deck is a big addition of “outdoor space”
- Optimism about potential tax laws being revisited (particularly $10K SALT cap, which significantly affects carrying costs on high-end homes in high property tax/income tax states)
- Look for a potential drop in price (and a glut of inventory) for investment property across the board due to:
- Long term moratoriums on evictions resulting in many months of lost rent
- End of mortgage abatement
- Landlord fear of renewed eviction ban – The federal ban currently does not relieve tenants from payments but from eviction. As such, when evections/abatements are lifted, some owners and tenants may find themselves so deep in real estate debt that they may be motivated toward strategic defaults/accepting rental judgments against them in lieu of paying. This will result in a micro-foreclosure market of investment properties
Following the trends of remote work and homebuyers looking for affordability, suburbs stand to benefit. Workers are departing expensive urban core markets and seeking affordable homes in less expensive settings, often suburbs of larger and mid-sized cities. Small cities and towns will continue to draw new residents with incentives and programs. As workers migrate further into the suburbs, employers are likely to follow, further increasing home prices in certain areas based on incoming demand. Housing demand and price appreciation are likely to rise at strong paces in most metropolitan areas with a few notable exceptions (Detroit, New York City).
Technology in the 2021 real estate space will continue to leverage virtual platforms. From virtual tours to virtually staging a home, technology has changed the real estate experience. Both Buyers and Sellers benefit from technologies that enhance the presentation of homes as well as the ease and speed of transactions.
Some home sellers might prefer the speed of using an iBuyer platform, and these services are forecast to continue to rise in use for 2021. However, they often do not understand the full cost of their choice. Important points to note:
- iBuyers don’t buy every home
- Sellers get less than Fair Market Value for their home
- Sellers are required to pay for repair costs they may not agree with
- Not all iBuyers offer the same services
- Home sellers are in essence paying to “not” play on the open market
- In some cases, choosing to work with iBuyers may cost sellers up to 15% of their home’s sale price.
Our Real Estate Experts Are Here for You
At GMS, we take pride in knowing that we employ one of the most qualified and successful real estate teams in the relocation industry. We are here to answer any questions and ultimately help you and your employees with all of their relocation needs. We assist companies moving employees from all over the world. Contact us now with any questions you need answered.