According to top agents, 2021 stories will relate in some way to the pandemic, with the tight inventory of homes topping their list. Also: How will vaccinated sellers react? Will a lot decide to list their home this year after months of waiting? And how many homes will go into foreclosure?
NEW YORK – The biggest story expected in 2021? The lack of inventory, said real estate professionals surveyed by HomeLight, a real estate referral company. HomeLight’s Top Agent Insights report, conducted in the fourth quarter of 2020, reflects responses from more than 1,000 real estate professionals nationwide.
Survey respondents identified seven key trends expected to affect housing the most in the new year, according to the survey:
- Inventory shortages
84% of the real estate professionals surveyed said that inventory was lower than they expected at the end of 2020. The National Association of Realtors® (NAR) reports that November inventory levels were down 22% year-to-year. Real estate pros in the South Atlantic were most likely to cite a lack of inventory as the top factor affecting their housing markets in 2021, and Midwestern agents were least likely.
- Widely distributed vaccines could boost consumer confidence
50% of agents said a widely distributed vaccine could encourage more sellers to list their homes and help offset inventory challenges. “This indicates that buyers could have more housing options later in the year, though with inventory starting from such a low place, the market could remain highly competitive for a while,” according to the HomeLight report. The vaccine also could help businesses reopen fully and give more Americans added job security and the confidence to enter the housing market.
- Some homes will be lost to foreclosure
40% of real estate agents believe that the end of forbearance and stimulus plans could cause an increase in foreclosures. However, growing home equity may help homeowners sell in a strong market rather than go into foreclosure. Most owners in foreclosure during the Great Recession had little or no equity, and many had negative equity.
- Low mortgage rates will continue to drive demand
97% of agents said that low mortgage interest rates increased buyer demand in their markets: 68% reported that renter clients decided to speed up their plans to purchase a home, 66% said current homeowners opted to trade up faster, and 46% said older adults decided to downsize sooner due to the low rates. There are some concerns, however, that mortgage rates could increase from 2021’s record low. One in three (34%) of agents expect mortgage rates to rise as people receive the vaccine and the economy improves.
- A permanent shift to remote work could encourage moves
Nearly 15% of agents said the shift to working from home could have the biggest impact on the real estate market in 2021. “Many employers will likely give the final word on which jobs are to become permanently remote in the coming months, which could trigger another round of relocations,” the report notes. “With California frequently topping lists of states with the most remote jobs, agents in the Pacific Coast were most likely to cite this trend (19.8%), followed by agents in the Northeast (16.2%).” The impact of remote work on real estate likely will be the least prominent in the South Central region where only 8.3% cited remote work as an influential real estate trend for 2021.
- Virus surges won’t lead to further market panic
“The U.S. may not yet have a handle on COVID-19, but the surprise element has passed,” the report says. Real estate professionals are more prepared to take their businesses virtual and to still transact while socially distanced. Agents have increasingly turned to virtual tours, digital closing technology and remote showings during the pandemic. “Compared to 2020 when buyer activity abruptly halted due to the virus and then surged once lockdowns eased up, this year is likely to be one of relative normalcy for housing trends,” the report says.
- Affordability challenges persist – tax credits may help
Lawmakers are racing to try to come up with solutions for affordable housing issues, and 11% of agents believe that finding an affordable home will be a major challenge facing buyers in 2021. Overall, 37% of non-homeowners cite the down payment as one of their biggest obstacles to homeownership. But some agents are optimistic that tax credits expected from the Biden Administration may help, with 55% supporting President Biden’s proposed $15,000 down payment tax credit for first-time buyers. The tax credit – which could be used at the time of purchase – has been proposed as an extension of the Recovery Act’s temporary tax credit.
Source: “Top Agent Insights Q4 2020 Report,” HomeLight (2021)
© Copyright 2021 INFORMATION INC., Bethesda, MD (301) 215-4688