The last 12 months has been a very difficult year for every industry, the US was hit hard and fear grew last March that real estate could collapse as everybody went under lockdown.
But if you look at the last 12 months you will see that real estate has actually played a significant part in the economic recovery, 2020 turned out to be a record year with over 2.6 million homes sold during the pandemic. At the end of 2020 buyers were facing unprecedented competition and increasingly out-of-reach home prices.
Real Estate Agents have had a full year to adopt to the new ways and with inventory at record low levels it looks like 2021 is going to be an even better year.
Forbes magazine have just ran an article stating “A new long-term housing boom is upon us. And COVID-19 is the main reason why” They state in the article that both the housing and economic cycles have shifted to longer cycles, 10 year cycles, this is due to factors such as technology and monetary policy.
Over the next 10 years different factors will push this cycle in an upward trend. Such as economic recovery from a global pandemic, forecasts of continued growth in the GDP, sustained low interest rates and most importantly low housing inventory levels due depleting supply since the last recession.
Danielle Hale chief economist stated “We expect sales to grow 7 percent and prices to rise another 5.7 percent on top of 2020’s already high levels. While we expect mortgage rates to tick up gradually, sales and price growth will be propelled by still strong demand, a recovering economy, and still low mortgage rates.
Robert Dietz, senior vice president and chief economist of the National Association of Home Builders stated “ With home builder confidence near record highs, we expect continued gains for single-family construction.
One recent trend over the last 12 months is the shifting geography of housing demand to lower-density markets and historically low interest rates. Many people moved from city dwellings to suburbia as we all learned to adapt to the online business world
Elana Knoller better.com stated “Homeowners and the housing industry at-large will utilize technology even more next year to engage buyers and execute deals. 2020 changed the game in everything from touring properties to looking for and locking rates, and participating in secure eClosings”
Professionals and individuals who can work from home are buying homes to work at home and are therefore changing housing preferences,” we want a study and a large garden” Combined with record-low mortgage rates and forbearance programs, odds are the housing market will remain strong in 2021.
Another big argument for this increased demand for suburban properties are the “Millennials” according to David Howard from the National Rental Home Council, it is theMillennials, who are transitioning squarely into prime household formation years.
The fact is now there is light at the end of the tunnel from Covid 19 it is imperative Governments world-wide push the economy through incentives and breaks. Paul Lueken the chief executive of Draper and Kramer Mortgage Corp stated “As the Covid-19 vaccine is distributed, the economy will begin to open up and recover. Economic activity will most likely return to pre-pandemic levels by late 2021 or early 2022. The Federal Reserve will continue to support a low interest rate environment for much of 2021, and mortgage rates can be expected to remain low for most of the year. Home sales will therefore stay strong due to the low interest rates and the recovering economy”
Realtor.com‘s summarised all of these key points for the 2021 forecast:
* Spring and summer home-buying seasons in 2021 will be strong.
* The existing home sales will increase by 7 percent in the year 2021.
* The rise of millennials will push the housing demand up.
* The home prices will appreciate by 5.7%.
* Single-family housing starts are now predicted to increase by 9 percent.
* Low mortgage rates will keep purchasing power healthy
* Buyers seeking affordability and space will drive interest in the suburbs.
* The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown.
* Fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers
While everything seems positive on the sales front other websites are stating that lingering economic uncertainty may temper some of the predictions. They state that sources of economic uncertainty, including lapsed fiscal relief, the long-term fate of policies supporting the rental and mortgage market, and virus-specific factors must be taken into consideration.
Overall we are still coming through a storm and whatever opinion you take on this forecast it looks like things will be getting back to normal soon and all industries will be pushing to make the economy even stronger than before the arrival of Covid 19.
If you would like more information on investing in the US market please email invest@globalinvestmentsincorporated.com
