During the pandemic, people left big cities and, thanks to remote work, many were able to purchase homes in the suburbs. Families opted for even more space while landlords had to deal with trying to collect rent from tenants who had financial difficulties.
While the real estate industry had a chaotic ride in 2020, 2021 has been a year of growth. In this article, we’ll discuss the trends in the industry so you can make the right decisions on buying or selling your home.
Continued Housing Shortage
Throughout the entirety of 2020, some decided to stay put in their houses while others left their apartments behind to purchase property in the suburbs. This increased demand left a short supply of homes for sale, which continued into 2021 and is expected to continue for some time. As jobs continue to come back, those who wanted to purchase a home before the pandemic will continue their search, while others are now able to take out loans. More buyers in a competitive market mean home prices will continue to increase.
An increase in home values is good news if you’re planning to sell property, but it makes buying a house even more difficult for first-time homebuyers. Buyers will need to snatch up their next home quickly as houses are selling faster than in previous years. In many cases, you’ll need to compromise and sacrifice some of the features you want in a home if you want to purchase a house this year. For example, you may have to sacrifice space and store your stuff in a storage unit. You may also find yourself buying a home that requires more updates than you were hoping for.
Sellers, on the other hand, don’t have to worry about too much competition. Many houses are selling for more than the asking price because of the competition between buyers, which means you may not have to improve your curb appeal too much. Since your home is one of the few on the market, you can pick the best offer.
With more competition among buyers comes higher home prices. Home prices grew in 2021 compared to 2020, which means home sellers don’t have to worry too much about getting low-ball offers. It could mean you get a nice profit on your home, allowing you to have extra money to put away for the purchase of your next home.
Unfortunately, the fact that homes are selling at higher prices isn’t great news for buyers. If you want to buy a home in this market, you must determine how much you can afford and even get preapproved before you begin your search. While you can’t exactly save money when buying a house, you can avoid additional costs by saving for a 20% down payment so you won’t have to worry about private mortgage insurance.
Low Mortgage Rates
Mortgage rates are still incredibly low right now, and experts believe they will stay relatively low for the rest of the year. If you want to refinance your home or get a mortgage, now is a perfect time.
For buyers, a lower mortgage rate means your home loan may be more affordable. However, you shouldn’t feel pressured to buy a home when you aren’t financially ready.
As a seller, however, buyers are more motivated to buy your house now so they can take advantage of low-interest rates. However, if interest rates start increasing, your home might be on the market longer than expected. Even if you don’t plan on moving right now, you can still consider refinancing your mortgage for a better rate.
Online Real Estate Services
Online real estate services, such as Realtor.com allow you to easily browse and list homes. However, there are tons of online services that will buy and sell your house on your behalf. These include:
Third-party buyers will buy your house from you, fix it up, and resell it at a higher price. They handle everything involved in the home selling and buying processes, such as inspections, repairs, showings, and more. They also charge you the same as an agent would for selling your home. While these buyers take a lot of the work off your plate, you can expect less profit.
Virtual agents allow you to reduce your costs by working with someone online. With these agents, you get similar services as you would when working with an agent, but at a lower cost. Virtual agents are the middle ground between selling your house yourself and working with an agent.
While you may still want to work with an agent in person, it doesn’t mean you can’t take advantage of online services. With technology, you have virtual documents with electronic apps and online notarization to streamline the closing process.
Risky Buying Options
While risky buying options have always been around, they are more accessible now that more people are buying homes online. Here are a few to watch out for.
Many people who can’t afford to buy a house yet might find an alluring rent-to-own agreement. In this agreement, you will rent a home for a specified time before you can own it. Rent-to-own allows you to bypass the need to save for a downpayment and quickly move into a house. It also means you don’t necessarily have to qualify for a mortgage when you sign the agreement.
Unfortunately, rent-to-own makes your rent even more expensive because your monthly payment goes to future homeownership. If you later decide you don’t want to purchase the home, then those additional payments will have been for nothing. In addition, you might have to handle all repairs even while you’re renting the property. At the end of the day, if you feel like you can’t afford to purchase a home, you’re better off waiting until you can.
Down Payment Loans
Purchasing a home with zero down is never a good idea unless you qualify for a VA loan. In most cases, you’ll want to put at least 10-20% down to avoid paying private mortgage insurance. Buying a home without putting anything down means you’ll be paying more over the life of the loan and more in monthly payments. Luckily, very few mortgage lenders allow you to take out a personal loan to fund a down payment. However, if you do find yourself with a lender that does allow you to do this, it can not only impact your financial goals, but it can impact your ability to qualify for the loan you need.
Real Estate Trends Impact Your Decisions
Whether you’re buying or selling, you should always keep up with real estate trends so you can know what to expect. This year, buyers will need to expect lots of competition and fewer homes available, while sellers can expect tons of buyers interested in their homes.
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.