The Hot Housing Market in 2021
After the year we’ve all had, it’s about time for some good news. The housing market is set to be red-hot in 2021. That means increased values, inventory moving quickly, and sellers feeling incredibly motivated. Let’s take a closer look at what’s going on in today’s residential real estate.
Home prices. Demand for homes is currently high, but inventory remains lean, a classic setup for higher property values. That’s great news for sellers who hope to capture top dollar for their properties. It’s perhaps not-so-great news for buyers. We hope to see an improving economy so that buyers won’t be priced out of the market. With coronavirus cases expected to level off and then drop between March and September, leading to economic recovery and increased consumer confidence, this summer could usher in the ideal scenario for a seller’s market.
New construction remains limited. Lumber shortages have contributed to a 60 percent increase in the cost of lumber, which of course impacts the cost of housing construction. New construction leveled off in November 2020 and seems set to remain that way for the foreseeable future. This situation sets the stage for a bidding war over existing homes.
Workers are relocating. Remote work put a stop to commuting for many workers, allowing them to move to the location of their choice. While many of these workers have already moved and settled into their homes, remote work has not yet become a permanent option at many companies. However, some surveys have shown that about 70 percent of workers expect remote work to become permanent.
As employees pressure employers for the remote work option, we can expect the migration trend to continue. As newly-eligible remote workers flee crowded cities like San Francisco and Los Angeles, pandemic-driven relocations are still on the move. We can reasonably foresee the real estate markets in popular, livable smaller cities and towns heating up dramatically this summer and early fall.
Will vaccine rollouts have an impact? As vaccines roll out and consumers begin to feel more confident, the resulting economic recovery could prompt more new home construction. Schools in California may also continue to reopen as teachers feel more confident going back to work, and parents feel safer regarding the school environment. However, interest rates, which dropped in response to economic conditions, could also begin to recover as well. When that happens, we could see home prices begin to level off.
We will continue to update our clients and contacts regarding real estate market conditions. In the meantime, contact our real estate attorneys for assistance with the legal side of buying or selling a property.