Where is the 2021 real estate market heading? Will the market settle down in the new year? Will home prices continue to go up? Should I wait until Spring to list my house? Will there be more inventory in the Spring? These are just some of the questions we keep hearing, but the list goes on. People are asking, they want to know and we are here to help!
It’s safe to say 2020 was a year like no other. The past year has brought challenges and uncertainty like we’ve never seen before. Despite political differences and a global pandemic, there were still some positives that came out of 2020, like the upwards shift in the real estate industry. "A bright spot in an otherwise dreary 2020 was the residential real estate market." 5
2020 was a record-breaking year nationwide for real estate as a whole. Now, with interest rates at an all-time low, buyer traffic steady and climbing by the day and home prices appreciating rapidly, experts predict 2021 will mirror, if not surpass the past twelve months. Here we are, a month into 2021, and things are looking promising for the real estate market as we jump into the new year - let’s dive into the details.
Interest rates play a big role in the booming real estate market. With interest rates at an all-time low, it encourages buyers to purchase that home ‘they’ve always dreamed of.’ Although they may rise slightly over the course of 2021, rates will remain low for the foreseeable future.
“The record low mortgage rates have been the key factor for home buying even in a difficult job market condition. As we enter 2021, jobs will steadily recover especially knowing that the vaccine distribution is just around the corner. The interest rates will continue to be favorable since the Federal Reserve has indicated such.” 1
Change of Lifestyle
We can mainly thank low interest rates for the growing list of buyers, but in addition, COVID-19 has given many people a reason to rethink their home base. Daryl Fairweather, Chief Economist at Redfin states, “It has more to do with the pandemic itself: how everyone is stuck at home, working from home, teaching their kids from home. The home has just become so much more important.” 2
The pandemic has forced many to work, learn and play virtually. As priorities change in response to COVID-19, buyers are seeking less congested areas, like our beautiful Maine. Being able to work and go to school remotely has become the new ‘normal’ in our society and is one of the many reasons families and individuals are choosing to relocate.
“With working from home now the standard, people can work from anywhere, and it looks like Maine’s clean, safe environment, our quality of life and our vibrant cities and towns are beckoning people and businesses to relocate here.” 3
Let’s chat about those prices everyone is talking about. For sellers they are thrilled, for buyers they are stuck with the choice of, ‘how bad do I want this house!?’ 2020 shocked many real estate professionals, as well as buyers and sellers. Home prices are dependent on supply and demand. With the buyer traffic extremely high and inventory low, prices have skyrocketed. We are seeing many multiple offer situations and buyers are paying slightly more for homes just so they can be in certain areas.
“Maine home values jumped 13.38 percent in 2020; while sales increased 9.82 percent.” 4
It’s projected that these percentages will continue on this trend into 2021. Southern Maine has been a destination location for some time and continues to grow in popularity, for vacation and year-round residents alike. Over the years, Maine has brought a higher level of cliental which has contributed to the rise in home values. Many buyers moving to the area are willing to pay for the exact location and house they desire. This is good news for our Maine sellers, but a tough realization for most buyers.
The Best Time is Now
Warning! Do not wait until Spring when there will be more inventory to choose from. Sellers, now is the time to list! And buyers, be ready to go. Have your finances in order and jump immediately when the house you love comes on the market. Inventory will pick up and so will the competition.
“The 2021 housing market will be much more ‘normal’ than the wild swings we saw in 2020,” said Danielle Hale, Chief Economist at Realtor.com. “Buyers may finally have a better selection of homes to choose from later in the year, but will face a renewed challenge of affordability as prices stay high and mortgage rates rise.” Home prices could reach new highs in 2021, climbing by 5.7 percent, as growth continues, but at a slower pace. 5
Bottom line, the 2021 real estate market will remain strong and extremely active. We can expect interest rates to remain low. Buyers are looking, determined and ready to jump. Sellers are becoming more motivated to list their homes with the rise in overall home value. Whether you are looking to buy, sell or simply ask a few questions, make sure you have a trusted real estate professional on your side that knows the market inside and out. So, if you need support on your real estate journey or may know someone, contact us at Schlegel Realty for all your real estate needs.