What does 2021 hold in store for the Real Estate Market?
The main questions that remain to be answered:
Will it still be a seller’s market in 2021? Will interest rates rise? Will there be a real estate market correction or slump?
2020 Triad Real Estate Market
First, we must realize what all happened this year to understand what we should expect in 2021. The real estate market started out the year fairly strong, with a small lull in the January/February, which is typical for the Triad area due to the weather. Things were ramping back up in March, getting ready for the spring market, when just about that time (St. Patty’s Day) everything was shutdown. It was a very uncertain time for just about everybody and the real estate market took a quick dip, but quickly recovered in about four-six weeks. The interest rates being in the two-three percent range encouraged people to buy even more than before, leaving a housing shortage in just about every state. About mid -summer, when there was more information gathered about COVID-19 and after many people were refined to being in their homes a lot more than usual, there was another influx of buyers in the already saturated market. Unfortunately, due to the uncertain times, most buyers were not wanting to list their properties until they found something for themselves to buy. That, along with many other uncertainties in the market created an even larger shortage in housing.
Despite all these obstacles, rolling through the summer and strong into the fall, real estate sales were phenomenal. Then, there was a sudden and somewhat substantial slump in the market leading up to the 2020 election and following the uncertain results. But, after the Thanksgiving holiday, the market came back stronger than ever. Since it is looking like we will be ending the year on a strong note, it has many people wondering what’s next?
Will interest rates rise?
Since the mortgage and real estate industry contributes heavily to the economic backbone of America, it is important that the imbalance of low interest rates doesn’t last too long to ensure stability in the market. The real estate market alone makes up of about a fifth of the total economy. Continued low interest rates gives people a false sense of security in the market allowing the inflation to rise. Most economists believe that the interest rates not only will rise in 2021, but need to rise. While most agree, rates will not immediately spike, an expected gradual rise throughout the next year is expected.
Will it still be a seller’s market in 2021?
With the unemployment rate reaching up to 14.7% in April, there is bound to be some repercussions in the housing market, at some point leading to an influx of foreclosures in the market. While the government is trying to release as much relief as possible to postpone this upcoming situation, there still will be some sort of an influx of foreclosures in the market. Once more houses hit the market, this will loosen the housing shortage, leading to a little shift towards the buyers.
Will there be a real estate market correction or slump?
Having an influx of houses arise in the market, whether it be a lot or a little, a flood or gradual, it will start a correction in the market. How big or small this correction will be is unknown. There are simply too many variables at play to determine how exactly things will play out. A correction isn’t always particularly a bad thing, though many may think so. It simply is just ensuring steady growth for a stable economy rather than allowing the prices to continue to inflate without true financial backing.
If everyone hasn’t already had enough change already from 2020, buckle up for a few more at least in the real estate market come 2021. It’s not all doom and gloom though, hopefully the correction in the market will ensure a long-lasting stable market to come.
We wish you all a Happy and Safe New Year!
Sources:
DoLittle Insights
Fool.com
U.S. Bureau of Labor Statistics
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