Virtual Tours, Home Shortages, and Other Ways Real Estate Has Changed Going into 2021
Two things you can always count on at this time of year: A recap of the past year, and predictions about the one that’s about to begin. Since 2020 was...let’s call it unpredictable...forecasts for 2021 are sure to generate a lot of interest.
Real estate professionals, along with homebuyers and homesellers, are particularly interested in how the housing market, the economy, and the ways in which human behavior will shape the coming year. Here are a few of the changes we expect to see in 2021.
Change in Circumstance = Change of Address
We can’t think of anything in recent history that has more of an impact on how people view their homes than the pandemic. Millions were forced to stay at home, work from home, and educate their children at home. It’s no surprise that many found their living spaces lacking in one way or another. Home sales were up in 2020 and we expect that to continue in 2021.
The Buyer’s View: The current work-from-home culture is here to stay for many people. People will look for homes with more space, or at least more efficient use of space. More importance will be placed on home offices, eat-in kitchens, and indoor and outdoor recreational spaces for the family.
Older millennials are set to enter their 30s, a time when many people look to abandon cramped apartment living and buy a house. Provided they’ve weathered the economic bumps and have maintained steady incomes, we expect to see plenty of first-time buyers in 2021.
The Seller’s View: Those who already own homes many decide to upsize or downsize in 2021 for the same reasons. And thanks to remote working, the “someday” dream of living in the suburbs or in a rural setting might be possible now. There’s talk of some urban areas emptying out as people no longer need to live in close proximity to their jobs. Meanwhile, those who’ve always wanted to live in the city are finally able to find property available there.
Sadly, some will need to sell due to job loss or a change in financial circumstances. The good news is that it’s a seller’s market and that is expected to continue. And old rules-of-thumb such as “springtime is the best time to sell” are no longer true across the board. These days, any time is a good time to put a house on the market.
The Real Estate Agent’s View: There should be no lack of work for agents in 2021. They will, however, need to listen to their clients more than ever. Buyers and sellers experiencing lifestyle or financial changes might have long wishlists or unrealistic expectations. It will be up to agents to tune into their needs to find them what they’re looking for, and in some cases be the voice of reason about what they can afford.
Demand and Prices Will Stay High
Houses sold quickly in 2020, keeping inventory low. And multiple offers and bidding wars seemed to be the rule rather than the exception. A roundup of expert opinions in a recent Forbes article agrees that this trend will continue in 2021.
The Buyer’s View: Buyers need to be ready for competition once they find a house they like and get pre-approved for financing before they even start to look. Higher prices overall might prevent first-time-buyers from getting that starter home. Buyers need to beware of getting caught up in a bidding war and paying more than a house is worth. With low inventory, they may need to reevaluate their list of must-haves, keep expectations realistic, and be ready to compromise.
When there are multiple offers, it’s helpful if buyers are willing to waive some contingencies. A large down payment or if possible, paying cash can help sweeten the deal too.
The Seller’s View: Homeowners who spent 2020 debating whether or not to put their house on the market might find 2021 the time to go for it. They will still need to do the usual things to get their house ready, such as making repairs and updating.
A seller’s market is great for finding a buyer or even getting multiple offers, but there’s a downside too. Sellers will find themselves facing the same lack of inventory when they look for their new home. Good timing will be important, as will finding the best offer. That may not be the highest dollar amount, but the deal that will close quickly and smoothly.
The Real Estate Agent’s View: Inventory will remain tight, but the market could get a boost from three sources: homeowners who have to move due to some of the circumstances we mentioned above, those who held back selling in 2020 but are now ready to go, and new construction. New construction is on trend to grow. The only wrinkles that might affect the new construction market are the higher cost and scarcity of building materials, and a possible labor shortage. As long as builders can overcome those obstacles, there should be plenty of new homes for sale.
While higher sales prices mean good commissions, getting to closing will take a lot of work for agents. Multiple offers could see clients missing out on a home and going back to square-one. But this is where the go-getters can shine: Finding solutions for clients and putting negotiating skills to good use.
One thing that will most likely impact buyers, sellers, and real estate agents in 2021 is a longer-than-normal wait for closing. The busy market and continuing low interest rates have lenders swamped in 2020. It will take some time for them to catch up with the backlog.
Technology Takes Centerstage
Searching online for a home has become common in the past decade, but the pandemic has made it a necessity. Not only can buyers check out listings, but they can take virtual tours and fill out paperwork electronically. Real estate technology has changed the way people buy and sell houses, and that is not going to change in 2021, in fact, it will become the norm.
The Buyer’s View: Buyers can narrow down their search when house hunting from the comfort of their own homes. High quality professional photos, 3D virtual tours, and even today’s map software make home shopping much easier than it once was.
Spending a Saturday hitting a dozen open houses, however, wasn’t possible in 2020, and might be out of the question for some time. Instead, visiting a house in person is now typically by appointment only, and with social distancing protocols in place. It’s helpful for a buyer to have a very clear idea of what will and will not work for them, so they can make the best use of their, and their agent’s time.
The Seller’s View: Decreasing open houses or eliminating them altogether might seem like a bad thing, but it might actually work in the seller’s favor. Buyers who come to see the house in person are more likely to be serious and ready to buy.
Sellers and buyers will both notice a difference in how closings work. Regulations are changing to allow for remote services like electronic signatures and even curbside closings. These may prove to become business-as-usual due to their speed and convenience.
The Real Estate Agent’s View: By-appointment-only showings will fill up the space in realtors’ calendars left by fewer open houses. Since this new environment will weed out those who aren’t completely ready to buy or sell, the majority of the agent's time can be dedicated to those who are.
They also need to be on the top of their virtual marketing game. They will be the driving force behind the staging and professional photos and videos. Many agents produce their own, personalized video tours that they can then share on social media.
Get Ready for 2021
Yes, after 2020, there is still a lot of uncertainty. People will continue to grapple with the pandemic, an uncertain economy, and the unknown of a new administration. But by all accounts, the real estate market will be thriving in 2021.
Whether you’re buying or selling, take the first step and find an experienced real estate professional. Our agents at Berkshire Hathaway HomeServices Select Properties can guide you through the changes.
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