Primary Factors to Watch in the 2021 Real Estate Market
Real Estate Reality By Carl Medford, CRS
“As seen in the Real Estate Reality Column in the San Leandro Times & Castro Valley Forum, written by Carl Medford”
With 2020 over and done, everyone I know is looking forward to 2021 and what they hope will be a much calmer, less catastrophic year. 2020 was certainly one for the record books, and none of us want to revisit the events that shaped the year. If we have learned one thing this past year, it is that anything can happen with little or no notice that might permanently change our lives.
Going into 2021, while we certainly have hopes for what the year may hold, we still do not have many definitive answers. As it relates to real estate, here are things to watch:
- The red-hot real estate market.
One of 2020’s big surprises was the overheated housing market. The year started with a bang, faltered a bit when COVID-19 arrived, but quickly regained momentum and finished strong. Pundits are predicting it will continue full speed ahead for least the next six months. The key drivers have not changed: low interest rates, limited inventory and a surplus of well-healed buyers.
- Low inventory.
Normal real estate markets rely on three groups to provide a flow of listings: move-ups (sellers looking to upgrade), retirees (looking to downsize or relocate) and forced relocations (job transfers, divorces, deaths, etc.).
With housing prices high, it is difficult to move up and, in a housing shortage, it becomes almost impossible to find a replacement home without first selling and moving out. Many sellers are unwilling to take the risk of selling without having a replacement lined up. This is not likely to change in the near future.
It is hoped that the passage of Prop 19, allowing homeowners over 55 to transfer their current home tax assessment to any area in California, will prompt many seniors to downsize. Previously, the potential of higher taxes for replacement properties kept older sellers firmly locked in place.
There may be another bright spot as well: many corporations are telling employees they can continue to work from home. This has spawned a migration from urban centers to suburbs and beyond, and should make more homes available.
- Low interest rates.
It is predicted that rates may creep up in the new year, but will still be at remarkably low levels that should continue to fuel purchases.
2021 is off and running, and all of us are praying this New Year will be better dramatically for all.
Carl Medford is a licensed Realtor with Keller Williams Realty and a licensed general contractor. This article is sponsored by the Central County Marketing Association.