Housing Market Predictions 2021

The real estate market came to a standstill in 2020 at the start of the pandemic when many states went into lockdown. No one would have been able to predict that the Coronavirus pandemic would happen or the effects that it would have. People were shut inside their homes and homes that were for sale weren’t able to be shown. Between that and the state of the economy being in question, the Fort Lauderdale housing market took a big hit.

Continuing to be a Seller’s Market

With a small inventory of available homes and an incredibly high demand, its obvious that most United States areas are currently seller’s markets. There has been a huge spike in the amount of people looking for their new home.

People are buying homes incredibly quickly. Homes are being bought faster than they have in the past. The rate at which houses are being bought is just one of the factors that has led to the competitive seller’s market that we saw in 2020 and that we will see throughout 2021.

Mortgage Rates

There was a lot of uncertainty in March of 2020 as we came to understand the seriousness of the pandemic in the United States. People weren’t sure what would happen to the job market or the economy. This meant that people were hesitant to buy homes. Between the uncertainty and the hesitation, there was a huge dip in people buying homes at the start of the pandemic. In response to this, mortgage rates fell, and ended up hitting all-time lows over and over again.

Freddie Mac ran a survey and discovered that there have been record lows for mortgage rates ever since the early parts of the summer in 2020. These mortgage rates hit yet another record-low at 2.65% in January of 2021. They have been recording mortgage rate data since 1971, and that is the lowest rate they have recorded.

These mortgage rates have gone up a bit but are still quite low. In April 2021, the rate had risen to a total of 3.04%. With such low mortgage rates, many are looking to take advantage before they rise and buy a home quick.

High Demand

One of the biggest factors in causing such a competitive real estate market is the demand. The biggest reason for such high demand is the low mortgage rate. The combination of all these people looking to buy a home and low supply has made the market lean in favor of the seller.

Houses are being sold in record time. This is a result of such high demand. As a result, buyers have to put their offer in for the house quickly to give themselves a shot. Fort Lauderdale is one of many places where a listed home could get half a dozen offers by the end of the week, all at listing price or better.

Houses for sale were being sold 6 days quicker in March 2021 than they were in March of 2020 on average, according to Nordada Real Estate. We believe that houses that appear on the market will continue to be sold at record times, as there is no end in sight to the disproportion of supply and demand in the housing market.

Low Supply

With home sales as of March 2021 falling by 52% since the previous year, and a low number of homes looking to enter the market, there is a very low supply that doesn’t look to get higher any time soon. With the rise in demand that has occurred as a result of such low mortgage rates, the supply of homes won’t be able to keep up with demand.

Sellers will have a big leg up over buyer’s in homebuying negotiations. With little options for the buyer, they won’t have much wiggle room when making an offer.

Economic Growth

The economy suffered greatly during the COVID-19 pandemic. The restrictions put in place by each state resulted in a tough period for many businesses. This had a negative effect on many aspects of the economy, including the job market, meaning many were living with much tighter budgets that they would otherwise. Now, as businesses have adapted and the vaccines have been rolling out, the strength of the economy is trending up.

A big aspect of this is that the job market has opened up. In February of 2021 alone there have been 380,000 jobs created. Unemployment has fallen by about 6%. That’s half of what the unemployment rate was in April of 2020. Between a better economy and a strong job market, many more people are in a position to buy a new home.

More Working from Home

Working remotely was rare before the pandemic changed how industries work. As businesses adapted to the pandemic and became accustomed to virtual working, it became clear that many businesses could have their employees work from home permanently or in a hybrid-schedule. That has had a big effect on the housing market.

The biggest change that has resulted from remote working, in terms of real estate, is that there are now many people who don’t have to worry about their commute. Suddenly, “location, location, location” isn’t as important in real estate, at least in terms of how close someone is from their workplace. People are now looking for homes in different cities or even different states.

According to a survey conducted by Redfin in December of 2020, 67% of people buying homes have either already moved to a different city or would be interested in moving to a different city as a result of having the option of remote working.

A Rise in Median Home Prices

It’s easy to grasp why median home prices would be trending way up when you take into account all of these factors. The mix of low mortgage rates and the opportunities caused by remote working have led to high demand that such a low inventory just can’t keep up with, causing an inflation in home prices. Research from Norada Real Estate Investments found that the median home price in March of 2021 was $370,000, which, compared to March of the previous year, is 15.6% higher.

These high home prices very well may be here to stay. A prediction from the National Association of Realtors says that there will be a rise in median home prices of 8% in 2021. There appears to be no end in sight for the high demand and low supply of the real estate market, which points to a continuation of high prices.

What the Experts Have to Say

While we have had experience in the housing industry having been around for 25 years, we wanted to get the thoughts of a true expert on the subject. That’s why we talked to Avis Swenson, a Keller Williams Realty Professional.

She confirmed what the reports have been saying. There “absolutely” has been a high demand and low supply of houses in her area of South Florida and that there is a large influx of people and businesses coming into the market.

In our talk, she also mentioned a unique phenomenon that is occurring in the area. “People are buying a second home and holding.” This is, of course, having a strange effect on the supply available both in the area and in the places that people are moving from.

Final Thoughts

For those selling a home in the Fort Lauderdale area, this is a great time. You will be in a great position as one of the few sellers with plenty of buyers. Expect the rest of 2021 to continue to be in your favor.

If you’re looking to buy a Fort Lauderdale home, keep in mind what type of market you’re buying in. When buying in a seller’s market, remember to be quick, avoid asking for contingencies, and make an offer that is at least the listing price if not higher.