End of 2020 housing market update and what to expect for 2021
This year has been quite the rollercoaster for the real estate market. However, with a record setting year coming to a close, it’s clear that the market was able to adapt and even thrive during these uncertain times. Will that be the case in 2021? Are these changes here to stay? How can you prepare? All good questions! Let’s dive in.
The beginning of 2020 saw a strong economy, low unemployment, and predictions for continuing gradual home price increases and low interest rates. Once the full understanding of the pandemic (and its economic effects) was known, the housing market came to a halt. However, it didn’t last long. As lockdowns lifted, the housing market came back stronger. Aided by historically low interest rates, which dropped from 3.73% in 2020 to the current rate of 2.67%, national home sales rose. In fact, in November alone, national home sales were up 20% over 2019!
While there was record demand, there was also extremely low inventory. Active listings fell 30% in 2020 to their lowest point yet. Because there weren’t enough homes to meet the sky-high demand, homes also sold faster in 2020 than ever before. In the Charlotte area, for example, houses were on the market for 16.3% less time. As you know, high demand and low inventory also leads to extreme home price growth. This allowed home prices to grow 15% higher, jumping from an average of $280,325 in 2019 to $322,000 in 2020.
Overall it was a record setting year that helped smaller cities, suburbs, and towns thrive as many Americans migrated across states and lots of locals decided to make it official with a home to make their own.
The year 2021 will likely break more records for the real estate market. Demand is expected to increase even further over its pandemic era high levels, especially if interest rates continue to stay on the low end. In fact, some studies have found that demand could increase by 21.9% for the highest growth since the 1980s. This will result in a continuation of raising home prices—possibly as much as 10%.
The inventory shortage could improve in 2021 as well. In 2020, new construction has increased by 12.8% – which is expected to continue in 2021, as long as it is safe to do so. As the economy improves with a vaccine and fewer restrictions, more sellers will also likely put their homes on the market. Both of these factors will help reduce the severe inventory shortage of 2020, giving potential homeowners options in a wider range of price options and home types.
On the whole, buyers will need to have more competitive offers and be ready to move more quickly. With way more buyers than sellers, buyers will have to stand out even more to secure a dream home in 2021. Luckily Ribbon can help, we can turn your buyers' offer into all cash so they can put in a competitive bid while they wait for financing to become available.
We can also help ensure you have the technology you need to continue to streamline your workflow with our Standard Offers platform, which allows you to handle the whole offer journey from one place.
From virtual tours to eSigning contracts to iBuyers and more, buyers and sellers have greatly benefited from a digital home buying and selling experience. This change has had huge benefits for agents too and no matter what happens to the market in the new year, technology will be the key to a successful 2021. So, Ribbon is a win for everyone!
Learn more about how Ribbon can help you have a great 2021.