Real estate is hotter than lava this spring, and after recuperating from the whiplash that was 2020, everyone is casting an eye into the future of the housing market. Coldwell Banker reports that one in five homeowners (20%) plans to sell in the next 12 months and that the number of actual sales this year will surpass last year’s. Yes, you read that right. A robust housing market in 2021! But with a housing shortage, how can that be? Wouldn’t that conflict with the lack of homes for sale? We will tackle these questions and more as we delve further into the future of the housing market.
Selling a home can be stressful at the best of times, especially for people venturing into real estate for the first time. By staying up to date on the latest market details, researching, and consulting your real estate agent, you stand a much higher chance of succeeding in your home buying/selling endeavors than going at it alone.
Consumers are currently outbid at furious paces in bidding wars, the winner sometimes forking outwards of $70,000 over the listing price! Homebuyers are frustrated, agents are exhausted, and we’re facing a historic, unprecedented era in the history of housing, the likes of which we’ve never seen.
Yet, we’re seeing 9.1% higher sales than a year ago, and the National Association of Realtors (NAR) predicts that 2021 will see an estimated 6.5 million home sales, up from 5.64 sales in 2020.
To understand how this might happen given the current housing shortage – and looking forward with no end in sight to either the pandemic or real estate mayhem, consider the delicate balance of inventory and demand and the tightrope the real estate market is carefully negotiating.
The statistics could meet NAR’s momentous prediction one of two ways:
- The number of homes for sale could suddenly increase, doubling supply.
- As the pandemic gets under control, fewer home buyers will seek out new homes.
In the first scenario, homeowners now are wary of putting their homes up for sale, concerned about having somewhere to go in such a tight market with little inventory. In the second scenario, those desperate to leave more highly infected areas searching for more comfortable living and working space may decide to stay where they are as the pandemic gets under control, and more people get vaccinated. Likely, a marriage of the two will calm the waves of the housing market once the pandemic begins to fade. Currently, demand is outpacing supply.
One often-overlooked solution to the lack of inventory is to build. 2021 is home builders’ time to shine. Luxury builders like Visionary Homes, Fieldstone Homes, and Ivory Homes build single-family houses and townhome communities at warp speed, even amid ever-rising prices and shortage of lumber. New building communities with new homes are popping up all over Davis County.
While new builder homes are a perfect solution for some, homeowners who would otherwise sell are still reluctant to put their homes into the housing market. The pandemic still looms, the real estate market lacks inventory, and homeowners want to see if their homes will appreciate any higher. The rise in home prices has significantly catapulted the worth of homes, resulting in wealth accumulation for current homeowners.
As the year progresses and more vaccines get distributed into people’s arms, we should see a shifting dynamic in more supply and less demand.
The pandemic lured buyers to purchase homes with more space and less cost, often causing some to move out of state and resettle in locations they otherwise would not have considered (e.g., the exodus from New Yorkers to the suburbs). As more people turn an eye toward using their stimulus payments in the economy and away from the housing market, that dynamic may be shifting.
The rising prices of homes may linger for the foreseeable future. Still, the high cap may also dissuade potential homebuyers due to the lack of affordability and fear of entering bidding wars until the lava cools.
NAR’s projections foresee a .5 percent increase in 30-year fixed interest rates over the next two years, resulting in higher monthly mortgage payments for consumers. While the housing market shortage won’t be solved instantaneously and may even last for a few years, it won’t skyrocket forever. So, where is the breaking point?
The good news here lies in the statistics and forecast from the NAR. NAR showed that Utah is one of the top states to have shown resilience and has predicted Utah will perform well in a post-pandemic environment. Homebuilding will continue, and new listings, constructions, and sellers will gradually emerge from the woodwork to restore balance. But until that happens, buckle in. It’s going to be a bumpy, frustrating year.
Coldwell Banker has been a trusted advisor for more than 114 years, helping buyers and sellers make the right decisions in times of prosperity and times of crises. Throughout our history, we have withstood numerous adversities and were born in emergencies following the 1906 San Francisco earthquake. Our goal has always been to bring honesty, integrity, and service to those in need.
As the news headlines raise questions and uncertainty over the housing market’s future, we at Inman Torres and Company are happy to provide you with real-time information and answer all of your real estate questions. You don’t have to go up to bat alone. We can supply you with vital market reports so you can be well-informed, including data on homes for sale in your area, homes sold, and your home’s current value.
Let us be your trusted advisor – we’re ready to share our expertise and answer all of your real estate questions. Please contact us today for a virtual presentation and discussion.
