With all the turmoil and uncertainty that 2020 has brought, the housing market has remained surprisingly steady with no signs of slowing down in California. After a brief period of low activity in home sales due to COVID-19 shutdowns in the Spring of 2020, homebuyer activity eventually outweighed market supply as people sought more space, ideal features, and affordability. Now that vaccines are underway, extended time at home is shaping how the population lives, where they live, and what they want beyond the pandemic. Here’s what experts are predicting for buyers, sellers, and renters in 2021.
Buying a Property
The pandemic has driven mortgage rates to historic lows – the average mortgage interest rate for a standard 30-year, fixed-rate is 2.67%. That is more than 1 percent lower than the average rate exactly a year ago. It also marks a new 50-year low for average rates. There is a stronger demand for housing, and this has been reflected in a 9% increase in home purchase applications. If the economy remains stable, these rates will likely increase gradually throughout the year but will remain low from a historical perspective.
Selling a Property
While low mortgage rates are a great indicator to buy, they can also prove to be an excellent incentive to refinance and stay in their current home longer. Many have chosen not to relocate if they already have a home with enough space for remote work and schooling.
However, with an expected increase in home prices, this might encourage some owners to sell. Nationally, prices are expected to increase by 5.7% by the end of 2021.
Homes are in high demand, and for the entirety of 2021, housing starts are predicted to be up 9% compared to last year. Popular home features will become what are now necessities amid the pandemic. Extra rooms and school spaces will be a major focus, as well as personalized outdoor space.
The rental market has unfortunately been more deeply impacted by the coronavirus pandemic. The shutting of retail stores, restaurants, and other in-person, nonessential workplaces has made affording rent a growing concern.
While temporary and partial eviction moratoriums and relief packages have helped avoid mass evictions thus far, many are still concerned about how long they will last, and when they will be able to return to work.
Looking ahead, new renter households will also bring a fresh demand to the market as the pandemic has shaped how tenants view their common area amenities. Pools, rooftop decks, and public lounge areas have become outdated and lackluster in a current climate that values privacy and solitude. Developers are now looking at how these common areas can be expanded to meet the needs of remote workers, and allowing for more private, intimate spaces.
If you’re ready to discuss your options or have any questions, please feel free to contact us so we may assist you. You can also visit our website to research more topics pertaining to the current market.