The past year has been filled with surprises for most of us, and it has affected industries of all kinds- both positively and negatively. One industry affected the most is the real estate industry. For the first few months of the pandemic, the real estate market was put on hold, just like most businesses. This has resulted in a sheer drop in economic activity, but thankfully, the real estate industry is resilient.
Perhaps due to the increased economic activity throughout the board, many individuals took the opportunity to buy properties when prices were at their lowest. 2020 saw 5.64 million houses sold, almost 6% higher than 2019. This positive trend has many realtors hoping for a better 2021. But before you go on repairing the furnace, upgrading the design, or renovating your property with the intent of selling, here are a few trends to be mindful of.
Appreciation is Still High
January 2021 still retains the positive prediction of 2020, with real estate demand remaining high. Economists predict that the value of properties is going to continue increasing, while more people would want to purchase a home of their own during this year. This increase in demand is also driving the inventory low. The pandemic has proven renting to be an unsustainable situation for most people. It has also confirmed that ownership is the most cost-efficient way. Despite this, the rental industry is still expected to see an increase in returns as people begin to travel and move about once more when the pandemic subsides.
More Competition for Buyers
Realtors need not worry about a lack of interest as many experts foresee that competition among buyers increasing. There is an increased demand for houses and property, thus driving the market to be more competitive. Many buyers are taking advantage of the global events, as the market has seen a sudden drop in prices in the first quarter of 2020. But as the months go by, and 2021 approached, the number of buyers trying to take advantage of lowered prices has increased, also increasing competition among them.
Another thing to consider is that millennials are now entering their late twenties and early thirties. They have gone through many challenges and economic recession but are now poised to buy their first house. This age group can be expected to become a major economic power in 2021.
Decentralizing out of the Cities
With an emphasis on social distancing, many cities are feeling more and more oppressive. Formerly crowded cities are now observing a migration en masse, as people begin to move out of the city and into more suburban areas. The aftermath of this is an increased demand in less than prime locations, such as cheaper suburban areas relatively far from business centers or even rural areas with a considerable price gap than its urbane counterparts. Companies asking their employees to work from home has also contributed to this, making price the most important factor in purchasing a property, instead of location or proximity to city centers.
Internet-based Real Estate Services
Just as with many things in these modern times, many daily activities and business processes now have an online equivalent that makes it more convenient. Real estate listing is now accessible at a click of a button, when years before, you had to purchase a newspaper just for that. But as technology and innovations develop further, and people become more adjusted to it, we will see more creative ways of utilizing technology.
Part of this is virtual home viewing, allowing people to tour a property for sale no matter where they are in the world. In times like this, virtual home viewing is a great tool, and the increase in its use shows how much people appreciate it. Even real estate agencies are now shifting their efforts into an online platform, creating apps to create property listings and make the seller-realtor-buyer coordination a lot easier. With social distancing and Internet-based activities still being dominant in mid-pandemic 2021, we can expect the Internet to play a more pivotal role in the real estate industry.
A Market Crash Is Unlikely
Volatile as it may be, the consistent activity of the real estate market signals one thing: a crash is highly unlikely at this point. Demand for property is high, prices for both ownership and rent are increasing, and there’s an increase in accessibility- all of this points to a better future. 2020 was indeed filled with uncertainties, and the market did see such drastic drops and dangerous situations. But 2021 shows steady growth, the development of the real industry is pointing in every direction but down.