It’s no secret that the 2020 real estate market was different than any the U.S. has ever seen. The strangest part of the year was how strong the market finished in Q4. As of the date of this article, that full-steam-ahead market isn’t showing signs of slowing.
In examining how the 2021 U.S. real estate might market may perform in comparison to the 2020 market there are several indicators to study. It’s important to take into account the huge drop in home sales experienced between March and April of 2020. The market last year was able to outperform the previous year even with this dip, and there are good chances we will not have the same drop this year. So the market is already off to a good start. Now let’s dive into a few more indicators that this 2021 market should exceed 2020.
1. Increased seller confidence
The main reason for the dip in home sales between March and April 2020 was a decrease in overall inventory as a result of health concerns. Homeowners who might have been sellers decided to hold off on selling and not risk being infected by potential buyers who spread germs through their homes. Now, with confidence in safety protocols rising, more sellers may start to list their homes. This shift has the potential to correct the current inventory drought in the U.S.
2. Little to no inventory
Even though sellers are starting to gain some confidence, inventory in the U.S. is still drastically low. At this point, we are experiencing a virtual housing drought. Back before the COVID pandemic hit we were hovering right around three months of inventory nationally for around the past five years. Since then, the inventory has fallen to less than 1.5 and does not seem to be growing as home sales continue to soar. Buyer demand is at an all-time high, and the influx of listings we would need to balance the market is not likely to happen this year.
3. Low interest rates
Historically low-interest rates continue to drive the market in 2021. Even more, buyers are in the market this year than last year as consumers sense the inevitable end of these rates by 2022.
4. Positive outlook for COVID relief
Probably the most important factor behind an ever-increasing U.S. real estate market in 2021 is the potential end to COVID-19. As more Americans are vaccinated and more go back to work, the economy will grow stronger. Financial institutions will most certainly gain more confidence in borrowers as well. As mentioned earlier, more sellers will feel safer listing this year than last.
Unless another unknown catastrophe occurs, the 2021 U.S. real estate market will certainly outperform 2020. Though these are all just predictions, the current market shows no signs of slowing anytime soon.
