This year has been filled with unprecedented changes in the real estate market. With the global economy becoming more volatile than ever, many of the changes that have taken place are expected to have an impact on the real estate market trends predicted for 2021.
Therefore, it is important to have a good understanding of what has happened so far to better anticipate and prepare for what is coming next year. That way, you can plan accordingly and make the most of any real estate investments you have programmed for 2021.
Real Estate Market during 2020
A sector of the real estate market that has shown a decrease in activities is those that are related directly or indirectly to public use. Among these, hotels, convention centers, retails and offices stand out. Furthermore, the construction of any of these sites has also considerably slowed down.
Also, the development of big cities, which had been a driving real estate force during the last few years has largely come to a halt. People are now more interested in rural settings or at least areas where there are less crowding and more open space.
A sector that benefited from this change was the suburban sector, with people looking for an option that allows them to be close enough to both the city and open spaces.
Lastly, people have become more interested in certain real estate aspects that used to go unnoticed by the majority of the population. These include municipal and state fiscal issues, realizing the importance of redundant supply chains, and larger concerns about equity.
Understanding the changes that have taken place during 2020, the question remains; what can you expect from the real estate market during 2021? Following business trends isn’t always easy, but here you have a compilation of the most important 2021 real estate trends.
1. Digital Marketing Will Increase
While digital marketing had already been adopted by many real estate firms and developers, this will become obligatory during 2021. People will be looking at possible investments online most of the time, which means anyone wanting to invest should get acquainted with digital tools.
Be it social media, marketplaces, or ads, online is the name of the game right now. Furthermore, more people will be willing to rent and even buy without seeing the place in person, although it is expected others will still want a tour of the place.
2. House Demand Will Continue to Grow
Despite the economic turmoil experienced by the entire world, interest in purchasing a home appears to continue to grow. While you might want to sell your house fast, there are many people interested in buying it.
This is especially true for cities like Buffalo, Sacramento, Washington D.C., and Baltimore. This trend is partially fueled by the renewed interest in suburban settings.
There are other drives too, which include the intention to have a place of their own as people are craving stability. Plus, the expansion of companies implementing work-from-home alternatives makes having their own space even more appealing as this becomes the main place where people spend their time.
With a large number at home, ownership becomes a more feasible option and it motivates many who were on the fence, helping them decide to make the purchase.
3. Lower Taxes Will be in High Demand
A trend that has been observed during 2020 and that is expected to continue to grow during 2021 is the search for low-tax cities. People have become more worried about the high taxes seen in large cities.
This has led them to look for alternatives that will allow them to have more affordable housing. One such example is Austin, Texas, which has lately seen considerable migration from families from other states.
Furthermore, taxes in different areas are expected to decrease as the value of hotels and entertainment centers diminished during 2020.
4. Projects Will Be Delayed
Numerous private and public infrastructure projects got delayed during 2020 and this is a trend that is expected to last through 2021. Numerous states and municipalities saw a decrease in their revenue, which has affected their real estate budgets.
Furthermore, it has been estimated that 65 percent of cities will have to either delay or completely cancel some of their infrastructure projects. This could have a considerable impact on city development.
However, interference from the federal government could aid in this context and provide a partial solution to this issue.
5. Single-Family Housing Will Continue to Grow
Before 2020, an increase in single-family housing demand had been observed. This has continued to grow and it is expected to last well into 2020, with some cities already being affected by this.
Some of these include Salt Lake City, Phoenix, and Tampa, where more affordable housing is available. These markets are therefore expected to grow as people continue to invest in them.
In addition, cities like Charlotte, Nashville, Denver, and Portland are especially attractive to your workers. The Millennial generation is now the largest purchasing group in the United States, and they have shown to be especially interested in cities such as these.
This is one of the reasons why these cities are considered strong real estate markets for investment.
6. Smarter Homes Will Have more Demand
Well before working from home became as popular as it is today, smart homes were becoming increasingly popular. This is a real estate market trend that has shown remarkable acceleration during 2020 and is expected to continue to grow in 2021.
With the advent of more interactive technology, home assistants, and motion sensors, people will be more attracted to buildings and houses that either has this technology integrated or where it is easily adaptable.
In addition, an increased concern for health and wellness might lead to a preference for more integrated designs, with large windows and large amounts of natural light.
7. Rent Will Be Slightly Cheaper
Recent reports have shown that rent in the United States has slightly decreased during 2020, something that is expected to continue during 2021. This real estate market trend will be especially seen in cities, as previous renters decide to move to more open spaces with more nature within sight.
Also, landlords are expected to be more flexible, as renters will now have the upper hand as they know the market is in their favor. This real estate market trend will be especially strong in cities such as San Francisco, Los Angeles, Boston, Seattle, and New York City.
8. Diversity and Equity Will Become More Important
Another real estate market trend that has shown considerable growth during 2020 is an interest in race equity among the real estate industry.
In 2020, greater awareness regarding this issue took place, leading to many people becoming involved in the search for equity. Furthermore, a survey revealed that 70 percent of those who participated believed the industry could take actions to end systemic racism.
Some of the areas in which this could take place include providing solutions to underserved communities. In addition, it is expected that real estate firms will take a closer look at themselves to make sure there is diversity within their teams.
Overall, 2021 looks like a year of growth and development in the real estate context. While there have been economic setbacks during 2020, demand for houses continues to grow, and internal migration from cities to the suburbs is likely to increase.
There will be business challenges that include implementing new policies that will help fight systemic racism as well as providing affordable options to younger generations. However, these are challenges that will set the basis for a more prosperous real estate market soon.
Similarly, cities will have to adapt to continue to be viable and attractive options for workers that are getting used to working from home. While infrastructure projects are expected to be delayed, investment in parks and green spaces is likely to increase as an incentive for residents looking for more open spaces.
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Victor Whittle is a real estate investment specialist, with more than four years of experience in the industry. He is specialized in real estate purchasing processes. Currently working as a Creative Marketing Specialist at Prospect Group.