2020 is in the books already, and we’ll remember it for a lot of uncertainty and surprising developments in the real estate market. Sure, we saw a rather sharp decline in purchases last Spring, when the pandemic broke out. But this decline was followed by a record-breaking incline in June, making for unprecedented growth amidst a bleak economic situation. 2021 has just begun, but we can already see it will be an interesting year, both politically and economically. While we can’t predict with 100% certainty what will happen in the real estate market, some trends will have a major impact. And you should be aware of them.

It’s a seller’s market out there

There’s a huge shortage of housing with less than 500,000 homes available for sale. This means prices will only be rising, making homeownership less accessible. Home prices are expected to rise by 10.3% in 2021

For buyers, low inventory will make finding an ideal house a challenging task. It will force buyers to sacrifice some of their requirements, for example buying a smaller house or choosing a less-desired neighborhood. Another important point is that houses are staying on the market 13 days less than they had last year. If you want to snatch the house of your dreams, you have to act fast. Don’t waste your time if there’s a good offer and get pre-approved for a mortgage in advance.

For sellers, the conditions are perfect. You can choose whom to sell to, when and at what terms. Just be sure you have somewhere to live once you move out. Buying a home under current circumstances takes longer than selling one. Keep that in mind.

Mortgage rates are expected to stay low

Last year was extraordinary for the mortgage industry: each month since June, mortgage rates reached new historical lows.  According to Freddie Mac, a 15-year fixed-rate mortgage reached 2.22% in December, the lowest reported number ever! Experts predict that rates will stay low throughout 2021 with an average of 3.3%.

When  mortgage rates rise above 3%, it will mean an end to the refinancing boom we’ve seen in the second half of 2020. It won’t be worth the effort to refinance your old mortgage with these rates. However, it’s still going to be low enough to make new mortgages attractive. It will stimulate new purchases despite the high housing prices, keeping the real estate market thriving.

People will return to large cities

The pandemic brought a rise to an unexpected trend of working from home. More people started to work from the comfort of their living rooms, and more companies adopted the remote work ethos by embracing digital solutions. This situation led to a noticeable decrease in demand for urban housing. A lot of homebuyers decided to opt for suburban areas and smaller, more affordable cities.

With vaccines being steadily rolled out, there’s a hope that things will return to normal this year. And this will lead to an increase in demand for city housing. Of course, it’s not written in stone, and a lot of things can happen throughout 2021. But no matter what, it’s too early to count big cities out.

Millennials and Gen Z will grow their presence

Millennials, the largest generation so far, were a significant part of the real estate market in the last year. The trend will only grow stronger in 2021. A significant portion of millennials are in their prime homebuying years as they are getting married and having kids. At the same time, Gen Z is already entering the workforce and some of them are ready to purchase their first property.

Millennials are the least wealthy generation so far, and with the rising housing prices, it will be more difficult and take much longer for them to purchase property. It’s not hard to imagine that a lot of them will go for smaller, more affordable houses in cheaper areas.

Another major point is that millennials and Gen Z have media habits that are wildly different from those of previous generations. To reach them, real estate and mortgage businesses will need to focus on their digital marketing efforts. For example, through an engaging, high-quality social media presence.

2021 is going to be an interesting year, to say the least. But looking at these trends we can safely say that it will also be a profitable year for those who work in the real estate industry. Be sure to keep your eyes open and watch out for any new developments. Are there any trends you’re particularly looking forward to? Share them with us in the comments below!