Bring it On, 2021! | The Residential Specialist

Several home real estate trends emerge in 2021

By Myrna Traylor

Everyone is looking forward to leaving the tumultuous year of 2020 behind. The COVID-19 pandemic and the associated quarantines, lockdowns and changes in how life is being lived from home have thrown what would have been a fairly normal year for REALTORS^® into a frenzy. It doesn’t look as if the wild ride will be over any time soon, however.

Data reported in September from the National Association of REALTORS^® (NAR) indicates that the median home purchase price rose almost 15% year over year, while sales of existing homes increased by more than 9%. Some of this heat is no doubt due to historically low interest rates, which allow affluent buyers to act on a decision to buy when they might otherwise have waited. Renters who bought homes represented 36% of buyers prior to the first wave of the pandemic, but increased to 45% of buyers since April 2020. It is reasonable to assume that people are looking for the traditional financial hedge that homeownership provides when so many sectors of the economy are in turmoil.

As always, lifestyle factors are playing a huge role in the decision to buy, but the pandemic has presented a new twist. For people lucky enough to be able to work from home, being at home nearly 24/7 for months has made deficiencies in their current homes more stark. Buyers want more space—indoors and out—to accommodate work, school and leisure activities that are all taking place from home. The 42nd annual report from the Urban Land Institute and PwC, “Emerging Trends in Real Estate 2021,” says single-family homes and new construction in the suburbs will continue to be in high demand.

This record demand is reflected in home sales statistics reported at the end of 2020. REALTOR^® Magazine cites sales of 6 million existing homes and 1 million newly built homes over the preceding year. The number of pending contracts is at record-setting levels, and prices have hit unprecedented highs. Jim Paulson, CRS, owner/broker at Progressive Realty Corp. in Boise, Idaho, believes this trend will continue into 2021. “I see absolutely no slowdown at all. It will still be a seller’s market; we’re seeing bidding wars nationwide.”

The buying frenzy is evident in Phoenix as well, says Linda Rehwalt, CRS, with RE/MAX Professionals. “These mortgage rates have really fueled the buyer pool. Inventory in the country is down 44%, and in my market, we’ve had a 13% increase in value this year. But the scary part for me is that we don’t know the full effects of COVID-19 on our market, because the housing values lag.”

Both Paulson and Rehwalt have tried to caution buyers about overpaying. “Some of the buyers are just being stupid, buying anything that’s available and not thinking past [the current moment],” says Paulson. “You don’t have to buy the one available choice at the moment; you could wait for the next one, even if it’s a couple of months down the road.” Rehwalt mentions that in her market, banks are waiving appraisals at contract signing for people who are putting down substantial down payments, and some buyers who have won a multiple-offer bidding war are having to come up with the difference between appraised value and the selling price at closing, either by financing it or in cash.

What will buyers be looking for?

Fixr’s “Single-Family Home Construction and Remodeling Trends” study reports that 90% of people are looking for open floor plans, and families with children want to be able to monitor schoolwork as kids conduct their classes online. On the flip side, adults and older students want a certain amount of privacy. “With more people working at home, builders might design multiple Zoom rooms instead of a single office,” Paulson offers.

Judy Hogue Wooten, CRS, with Crye-Leike in Rogers, Arkansas, has a suggestion for builders: “If builders will listen to their agents, I hope to see more house plans for multigenerational living. This optional ground-level living space (optional game room) will have a private bath and exterior door with outside sitting areas, and preferably a walled or fenced space for privacy and/or security.” Paulson concurs: “I have three different clients who are looking to build multigenerational homes here in the Boise area.”