7 Key Trends Expected To Shape Real Estate in 2021

The real estate market quickly adapted to the new world norms thanks to the COVID-19 pandemic, and the change won’t stop as we head into the new year.

If you’re thinking of buying or selling in the next year, it’s important to consider how the market may continue to adapt. Thankfully, top real estate agents in HomeLight’s Q4 survey have given their take on what to expect as we head into 2021.

Inventory may still be low

After a surge of buyer demand matched with seller hesitance to join the market, real estate agents saw very little inventory in the market at the end of the year. While realtors are hopefully inventory will pick up in 2021, we shouldn’t expect this to happen immediately. 

In fact, most agents expect lack of inventory to be the biggest influence on housing in 2021 — more so than even the change in presidential leadership. As of the last quarter of 2020, approximately 84% of real estate agents noted that inventory is lower than expected. 

The vaccine is expected to boost consumer confidence

While inventory may be low, many of the sellers are optimistic that this may soon be changing — especially thanks to the continuing distribution of a vaccine. 

Sellers halted their plans over fear of opening their home to foot traffic that could harbor the virus, while buyers were eager to jump back into their real estate plans after the lockdowns lifted.

A vaccine would be the first step in restoring confidence in many sellers. In fact, 50% of real estate agents think a widely distributed vaccine would encourage sellers to enter the market. This good news for buyers hoping to see more inventory in the near future. 

Some homes may be lost to foreclosure 

In addition to new homeowner confidence, 40% of realtors also believe the end of certain forbearance and stimulus plans could increase foreclosures in the market. This is why it’s now doubly important to grow your equity, as this will help many homeowners sell favorably in the face of foreclosure. 

If you’re worried about buying now and becoming the subject of foreclosure in the future, you’ll be glad to know that mortgage lenders are also increasing their qualifications for a loan in order to limit the number of foreclosures in the future. 

Low mortgage rates will continue to drive buyer demand 

Low mortgage rates were a key factor driving buyers to the market in 2020. Mortgage rates consistently dropped through the year, hitting a record low in December of 2.67% for the average 30-year fixed. 

However, these low rates may cease once the vaccine is distributed and the economy improves. An increase in rates could start to soften demand, yet buyers are still primed to take advantage of these new rates in the beginning of 2021. 

Remote work will spark buyer demand

When asked what the biggest impact on the real estate market in 2021, 14.5% of realtors noted the shift to working from home. Many companies are quickly shifting into permanent remote work environments and will continue to do so in 2021. This could trigger relocations, as those with remote jobs may opt for cheaper accommodations outside of major cities. 

The industry is prepared for any virus surges

The United States might not have a tight hold on the COVID-19 pandemic yet, but we have left the stage of sheer panic. Thanks to new real estate tools — like virtual tours, digital closing technology and remote closings — it’s now much easier to navigate the market virtually. 

Now that the industry is prepared, real estate agents don’t think it’s likely to see a repeat of the same V-shaped rise and fall of the market as we did in 2020. 

Biden’s first-time buyer tax credit will be drawn into the spotlight

The down payment has always been one of the biggest hurdles to purchasing a home, while agents believe finding affordable housing will be one of the biggest challenges facing buyers in the new year. 

This draws a spotlight on Biden’s housing plan, which includes a $15,000 down payment tax credit for first-time buyers, which will be redeemable at any time. Time will tell if this plan alleviates the pains of steep down payments for some prospective buyers.