Despite the economic challenges 2020 brought, housing has had a banner year: Mortgage rates bottomed out, buyer demand surged, and home prices responded accordingly. The most critical factor driving rental investment is the real estate market. Buyers and sellers alike wonder how COVID-19 will continue to affect the real estate market as we head into 2021.
For many investors, it's made finding that next property difficult. Foreclosure moratoria have thinned out the distressed market, and rising prices elsewhere have made it hard to guarantee returns. It's left many wondering: Will there ever be an end in sight? While there's no telling the future, there are some glimpses of what housing may look like in the new year. Want to make sure you are primed and ready for what 2021 has in store? Here's what the real estate experts are expecting.
HIGH PRICES MITIGATED BY INTEREST RATE
As prices climb, some buyers may struggle to meet the financial demand. Thankfully though, interest rates remain low as COVID-19 forced officials to mitigate the negative impact the pandemic has had on the economy. It is these low rates that now, in part, drive the demand for home sales. The pandemic initially halted the market, but as the economy continues to open, demand is increasing. That combination of low inventory and swelling demand creates a hot seller's market that experts expect to continue into 2021.
BALANCE BETWEEN BUYERS AND SELLERS
Inventory remains low with no viable evidence that the supply will meet the demand, both current and expected. New home development, which had been strong throughout the Summer, also shifted down in August. Low supply is scheduled throughout the remainder of Quarter 4 with little hope 2021 will see the increase needed to shift the market seller to buyer-friendly. Steady rising prices also signal a seller's market.
DITCH YOUR BOUNDARIES
As an investor, you may need to venture outside your local market to find the best deals. While the US is a seller's market, that does not mean every location shows the same metrics. Now is the time to be bold and seek new markets that may prove profitable in the long run. That said, working in unfamiliar areas means you need to be hyper-vigilant in researching local comps and projected rental income to ensure viability.