2020 was an exceptional year for real estate despite the coronavirus pandemic's impact on the country. After a rough spring, the market rebounded and gained strength throughout the year.
While 2021 is not expected to set the same feverish pace as the latter half of 2020, the pandemic will cast a long shadow. The conditions that drove much of the market will remain in place, though the seasonality associated with buying and selling should return.
Here are five real estate trends to watch in 2021.
There's a lot of demand in the Los Angeles housing market and, by extension, the San Gabriel Valley. Even before the pandemic, buyers outnumbered sellers by a decent margin, though transactions held steady.
With the pent-up demand and recalibrated lifestyles unleashed by the pandemic, buyers flocked to less urban cities such as South Pasadena and San Marino. With few listings and less development—also due in part to the coronavirus—home prices rose considerably towards the end of 2020. That trend is expected to continue well in the new year.
The rising home price trend will continue because the inventory of both resales and new homes will lag throughout the year. Shut-downs due to pandemic delayed planned developments. Rising land and material costs stifled others.
Those circumstances shifted the burden of transactions to resales, and there aren't enough to satisfy the ongoing demand. It may be a full year before housing development gets back on track, which might be problematic for those shopping for homes. However, for those wanting to sell, the next 12 months could prove quite lucrative.
Key among the reasons buyers continue to flock to the market—even in uncertain economic conditions—are attractive interest rates. As recent as the beginning of December 2020, interest rates were at historic lows—a 30-year fixed-rate loan hovered around 2.5%
Today, a month into 2021, a 30-year fixed rate is 2.75%; a 15-year fixed rate sites in the 2.25% to 2.5% range. Rates will rise over the course of the year but remain relatively stable. While the Fed is committed to keeping rates low for the next several years, experts see 2021 ending with rates in the 3.0% to 3.25% range for a 30-year fixed mortgage.
Another indicator singling a year-long seller's market is the influx of new buyers coming into the housing market. Millennials are the primary driving force as they start the search for their first homes en masse.
Current homeowners reevaluating their current living arrangements—Baby Boomers and Gen Xers—will also play a part in shifting housing demands. The former is looking to downsize, the latter hoping to expand.
Finally, the pandemic made an already tech-savvy populace even more reliant on conducting their business digitally. The housing market is no different. With most new home searches already starting online, 2021 could be a watershed moment for the digital house hunt.
For buyers and sellers, there will be an expectation to transact as much as possible virtually—everything from first tours to final document signings. Expect new tech-centered approaches to make the home buying experience both safer and more convenient.
Ready to explore the best of Pasadena real estate? Contact the Susan & Bradley Mohr Real Estate Group today to start your home selling (or buying) journey. From La Canada real estate to San Marino homes for sale, allow Susan and Bradley's experience and expertise to be your guide through the San Gabriel Valley.