What's Ahead in Real Estate!

We survived 2020 and made it to another year. Congratulations & Happy 2021! Last year probably went in an entirely different direction than what most of us could have ever imagined. The good news is that although the year might have been tough, so are we. In light of some challenges, there were still some positive things that happened, including a steady housing market. So, what's ahead in the real estate market.

Top 10 Markets

According to the National Association of Realtors, there are some top housing markets that have shown resilience during the pandemic that are expected to continue to perform well in a post-Covid environment in 2021 and through 2022.

The markets in alphabetical order are:

• Atlanta-Sandy Springs-Alpharetta, GA

• Boise City, ID

• Charleston-North Charleston, SC

• Dallas-Forth Worth-Arlington, TX

• Des Moines, West Des Moines, IA

• Indianapolis-Carmel-Anderson, IN

• Madison, WI

• Phoenix-Mesa-Chandler, AZ

• Provo-Orem, UT

• Spokane-Spokane Valley, WA

There were many factors considered that included, but are not limited to the number of workforce working from home, the unemployment rate, small business openings, and mobility to retail and recreational places in these cities.

Home Prices

The inventory in some key areas across the country were scarce in 2020, which created a seller's market. The low interest rates provided an opportunity for many new home owners to purchase their first home or for others to upgrade and take advantage of better mortgage payments. With less inventory, many sellers found themselves in multiple offer situations and even got offers considerably above asking price in many cases. The median home price (Realtor.com) as of December 2020 was $340,000, which was up 13.4% compared to the previous year.

With that being said, home prices this year are expected to grow by 3-4%. Experts believe that with the pandemic possibly behind us by fall, home inventory will increase and home prices will appreciate at a steadier pace. As people get more comfortable traveling and returning to school and work, the economy is expected to improve and give people more confidence in buying and selling. Again, this could create more inventory to choose from and more potential buyers.

New Construction

Record low mortgage rates have boosted the demand for new homes. Many home owners love the idea of having a home that has never been lived in. New homes also provide buyers with the chance to customize their home, and in some cases allows them several months to have it built. This can provide them much needed time to sell an existing property and/or relocate if they are moving from another area.

Land, labor, and material availability created many challenges last year, which in turn effected constructions costs. This will likely have an impact on rising construction prices, but will be well worth it to many who desire a move-in ready newly built home.

Commercial Real Estate

Well let's get the bad news out of the way when it comes to the commercial real estate segment. More retailers went bankrupt in 2020 than during the Great Recession. With the pandemic hitting the economy hard, it especially effected department stores and apparel retailers due to consumers shopping on-line. Unfortunately, more commercial businesses might go belly up during the first quarter of the year.

Now here's the positive news. Experts believe that things will begin to stabilize by the second half of the year. Warehouses and distribution centers, which have continued to do very well, will become even more valuable. Although businesses like hotels, offices, and retailers took a huge hit this year, as the economy improves those who were able to stay open will see improvements.

This is a great time for new business owners to take advantage of loans and vacancies in commercial buildings that could give opportunities for great terms for leases or purchases. 2020 created a lot of new business owners and lit a fire to the entrepreneur spirit. This could benefit landlords as those new owners look to lease or buy space for their expanding businesses.

Office spaces stood relatively empty last year, but workers will slowly start re-entering offices as the pandemic subsides. Halfway through the year, 86% of companies plan to return to the office, according to CBRE. Work spaces may need to expand to allow for distances between employees or some companies may opt for remote and office rotation schedules to limit those in the office.

Conclusion

The year 2020 was a year like no other. No one could have predicted that the world would have shut down and that our lives would be forever changed. As we move through this new year with hope, we can take comfort in knowing that the best is yet to come. We have more time and another year to start again. The real estate market will survive and thrive and create home and business ownership opportunities for those that are able and willing to benefit from it.

#realestate2021