Real estate market conditions are affected by a wide variety of factors. Despite the difficulties presented by the pandemic, the market was strong nationally and in the Deep Creek Lake area.
While we don’t have a crystal ball that shows the future with certainty, we do have some real estate market predictions for 2021 courtesy of Realty Biz News.
2021 Real Estate Market Predictions from Realty Biz News
The U.S. economy will see recovery in 2021. The National Bureau of Economic Research defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” After reviewing factors that indicate a recession, the data suggests that 2021 will generally see positive increases in the economy.
Buyer demand will continue to grow. With the return of economic stability and increases in personal incomes, the number of first-time home buyers will rise. This will create more competition for desirable homes and upward trends in home prices.
Positive factors that fuel demand include continued population growth, rebounding personal income rates, and improving consumer confidence. President-Elect Joe Biden has proposed a $15,000 tax credit for first-time homebuyers, which, if passed, will further spur buyer demand.
Mortgage interest rates will remain low. The National Association of Realtors expects that 30-year, fixed mortgage rates will remain stable or slightly increase in 2021 from the 50-year low of 2.71% in 2020.
Housing supply will lag. As sellers become more comfortable opening their homes to buyers, there will be a rise in available listings. However, new home construction is expected to be restrained due to “a shortage of lots, labor and building materials,” according to National Association of Home Builders (NAHB) Chairman Chuck Fowke. Affordability and the gap in the cost of living across the U.S. will continue to be a problem, especially in areas where housing is in high demand and fewer new homes are being built.
Home buyers will move to the suburbs. The long standing trend of moving from rural areas to the city is changing. More people are leaving cities due to high costs and aging infrastructure. Additionally, the pandemic provided the ability for many people to work from home. More people are retreating to suburbs and rural areas, something that will likely continue in 2021.
House size will continue to grow. The average single-family home size in America almost doubled in the last century to more than 2,430 square feet in 2020, even as the average number of people living in a house fell from 4.54 people to 2.58 people. On the other hand, the typical rental unit size in a metropolitan area shrank by 5%, though rents increased by 28%. These dynamics drive the appeal of suburban and rural residence for city dwellers. Another factor of the growth of house sizes is the possibility of making more profit on a home sale.
Technology access and use will be necessary home features. Advances in technology have changed the ways Americans work, play, learn, and communicate. Houses in neighborhoods or areas that lack access to high-speed internet are increasingly avoided by new home buyers.
Buying and selling a home traditionally requires significant physical effort, time, and expense to locate potential candidates, negotiate transaction terms, and process closings. Today’s home buyers and sellers have access to extensive information about city and neighborhood demographic information, specific houses for sale, and market prices without leaving their homes.
Technology use by realtors, agents, and affiliates will continue to expand. Virtual home tours are readily available, as are potential mortgage lenders. Legal documents and signatures can be captured remotely without visiting a physical office, and funds are transferred without paper checks. As artificial intelligence (AI) and the internet of things (IoT) becomes more commonplace, the convenience, cost, and speed of buying or selling a home will continue to decrease.
The number of realtors and transaction fees will continue to fall. Approximately 5.4 million homes are sold each year by 106,548 real estate brokerage firms. A benefit of technology use is better service to real estate buyers and sellers and increased efficiency of real estate professionals, which means the same realtor will handle an increased number of listings without increased time and effort with greater efficiency. The added capability of the industry will intensify competition and lower prices for customers. Overall, the industry will become better trained with better tools and flexibility to meet changing market conditions.
Home sellers will continue to have a market advantage. As a result of the considerable buyer demand compounded with low inventory, sellers have the upper hand. Prices have consistently been higher this year than last and continue to rise. For sellers who have been waiting, 2021 is an opportunity to sell your home fast, perhaps without having to make concessions for the sale to occur.
Real estate market conditions at Deep Creek Lake closely parallel this article. In 2020 we saw unprecedented demand for the rural lifestyle. Inventory of available homes dropped off late in the year but is starting to pick-up in early 2021. You can click here to see available listings.
I’m happy to answer any questions you might have regarding Deep Creek Lake or Garrett County real estate.