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Real Estate Industry 2021: What Can the Sector Look Forward to? Is the Worst Behind Us?

Real Estate Industry 2021: What Can the Sector Look Forward to? What Is The Next Real Estate Hurdle or Milestone?

Description:  What can be expected in 2021 for the latest real estate marketing trends?  Will the price of homes rise or fall?  Will mortgage rates remain at historic lows or rise as the economy improves?  What lasting impacts could Covid-19 have on the housing market in 2021?

Introduction

The year 2020 left many people reeling after losing their homes.  Others were left looking over their shoulder, worried about the future of real estate.  It makes a person wonder, “With what happened to homeowners and renters in 2020, what is the future of real estate in 2021?  Will the housing bubble burst just as it did in 2008, or will it defy expectations?

Impact of COVID-19 and lockdown

Covid-19 put the brakes on housing sales across the country at the beginning of 2020.  Many states instituted stay-at-home orders, and closed many businesses deemed “non-essential”, effectively halting home selling for a time.  People were furloughed or laid off from their jobs, thereby cutting off their supply of income and affecting their ability to buy homes or pay mortgages on existing homes.  But then, against all odds, real estate started going through the roof again in 2020. Once the real estate market started picking up again, the demographics and reasons for home-buying changed.  More young people are looking for homes than ever before.  More people are working remotely out of their home offices as employers and employees adjust to a new “pandemic normal”.

What will happen with housing prices?

Strange but true, housing sales and mortgages seem to be running counter to the rising number of foreclosures and evictions many Americans are facing.  2021 housing market predictions indicate that home sales will continue to rise.  Real estate website Zillow predicts that sales will rise a total of nearly 22% over the course of the year 2021.  That would be the biggest housing sale increase since the early 1980’s.  Prices are also expected to increase an average of three percent, according to the National Association of Realtors.  The average median price will have an expected going rate of just under $350,000.

Will mortgage rates remain low or rise?

Mortgage rates are expected to keep pace with the housing demand in this seller’s market, but still should remain surprisingly low.  As of February 4th, a 30-year fixed rate mortgage rose to 3.11%.  Rates are expected to stay in the high 2% to low 3% range, with Fannie Mae predicting an average of 2.8% for home mortgages.

Challenges ahead

There are several challenges ahead in this age of Covid-19.  Sellers must find creative ways to sell their properties and stay on top of the latest real estate marketing trends.  Several states remain under or have reinstituted Covid-19 protocols, including shutting or restricting how businesses operate, including realtors.  People in a position to buy a home are looking at the challenges of rising home prices and figuring out how to afford them.  Relatively low mortgage rates may offset the expense of a home purchase.  However, prices of new and existing homes are not expected to drop anytime soon in this seller’s market. Also, if interest rates rise, sellers could look at their homes being on the market longer.  Higher rates would contribute to the overall cost of a home in a dwindling supply market.  And lastly, as 2020 taught everyone, circumstances can change in an instant.  Prolonged economic woes could impact both buyers and sellers if current circumstances continue.

What the Government is doing for the housing market

The government is trying to stabilize the housing market by helping those at risk of losing their homes. The CARES Act freezes mortgage payments for those claiming hardship due to Covid-19. Several things have been done since the new administration stepped in, to help stem the real estate crisis.  One of the first things President Biden did after taking office was to ask federal entities to extend eviction and foreclosure moratoriums.    And the following are also being proposed as part of the President’s $1.9 trillion dollar Covid-19 relief plan:

  • Extending the aforementioned moratoriums through the end of fiscal year 2021
  • Provide $30 billion for emergency housing & rental assistance
  • Funding legal assistance for people facing losing their homes

How to navigate the next real estate challenges

Aside from the federal government extending moratoriums & loan forbearance s, there are other ways to stabilize the market and stop the next real estate crash.  Consumer advocate David Ramsey suggests these steps for buyers and sellers:

For buyers:

  1. Go for a 15% fixed rate mortgage.
  2. Limit your housing payment to no more than a quarter of your total expenses.
  3. Do not go for zero-down payment loan; put down 10% to 20% of the total purchase price.
  4. Do your research on different mortgage lenders.

For sellers:

  1. Look at nontraditional options for selling homes, including third-party sellers and online showing options
  2. Have a game plan for after the home is sold.

Conclusion 

So, what is the future of real estate?  It will continue to be a sellers’ market in 2021, albeit at a slower pace than 2020.  Even with historically low mortgage rates, buyers still face challenges with rising home prices as demand outstrips supply.  Some of the real estate facts for sellers are that they may be in the driver’s seat at the moment.   But they shouldn’t count on things lasting forever.  That’s especially true if Covid-19 continues to impact job and financial markets worldwide through shutdowns and various restrictions.  However, with careful planning on buyers’ and sellers’ sides, America can continue to ride the housing wave in the coming years while contributing to its stability.

Author Yuriy Moshes is the CEO of Moshes Law and attorney with broad expertise. He has two bachelor’s degrees. Being an experienced expert, he is considered one of the most in-demand specialists in the personal injury law field