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.Continue reading “Real Estate Market Predictions for 2021”