Although 2020 was full of dark and unprecedented times, the real estate market continued to thrive and boom. The flourishing housing market was one glimmer of hope in an otherwise struggling economy. Now with emerging COVID-19 vaccines, a path out of this painful pandemic is approaching. Many are wondering, what will a return to normalcy mean for the housing market in 2021?
Housing economists are predicting another big year for real estate. The chief economist at Redfin, Daryl Fairweather, predicts 2021’s real estate market will be ever stronger than 2020. “As the economy recovers, as the vaccines get the virus under control, people will be back at work, and people who have delayed selling this year will be ready to sell,’’ Fairweather stated. Fairweather also believes the interest rates may slightly tick up but stay historically low, which makes buying a home more affordable.
Homes are selling incredibly quickly, nearly 2 weeks faster than last year, because the market is so starved for inventory. Daniele Hale, the chief economist from Realtor.com, expects the housing market to ride its current momentum through next year, with home prices climbing 5.7 percent in 2021, both nationally and in the Boston area. Hale forecasts sales volume to increase 7 percent overall and 5.4 percent in Boston. She also predicts a return to “seasonality,’’ with strong spring and summer buying seasons and a wind down in the fall and winter. Boston, specifically, continues to experience a vast shortage of inventory.
The lack of new listings put a lid on home sales this year, Fairweather states, and continued to drastically push up prices. However, as the pandemic comes to an end, and buyers and sellers start feeling more confident about their future, and thus more comfortable with listing their home for sale or making a purchase, Fairweather predicts home sales will jump 10 percent in 2021, and price growth will slow somewhat, to a little less than 5 percent.
As more inventory hits the market in the second half of 2021 however, it still won’t be enough to satisfy buyer demand. There will definitely be an unrelenting demand for homes and another seller’s market next year.
As it did this year, that buyer demand will likely continue to center on larger homes with offices and outdoor space.
Furthermore, once people feel confident that life will return to normal, Fairweather expects buyers to return to cities like Boston — if not for the jobs, then for the lifestyle. “Boston isn’t just about office buildings; it’s also a place where people go on vacation. It’s a college town. There’s a lot to offer besides office buildings, so if office workers don’t come back, I don’t think that’s the end of Boston,’’ she said. “Young professionals and college students are going to want to live in a place that has nightlife and bars and restaurants.’’
Boston ranked among the 10 hottest markets in Urban Land Institute’s 2021 Emerging Trends in Real Estate report. “The industry is pretty bullish about Boston as sort of staying a top-tier city.’’
With a competitive market expected in 2021, agents said it’s essential for buyers to prepare. That means researching home values, canvassing what’s available, connecting with a local agent, and getting preapproved by a lender so you can act quickly. When you have something that works for you, you have to be ready and well-prepared to place a strong offer.
