Top 10 Commercial Real Estate Trends for the Roaring ’20s
COVID-19 has significantly impacted the housing market this past year, leading to both good and bad changes in commercial real estate. Let’s look at how those changes affect the housing market and what trends are on the horizon.
- Housing choices are scarce
The inventory for housing is low, yet demand is on the rise, and COVID-19 has only made this problem worse. Since 2020 listings have been on the short end, reaching some of the lowest levels on the record. Buyers are struggling to find homes, often meeting bidding wars and compromising on their dream home. Since 2021 listings have begun to rise slowly, however choices remain in short supply.
- The market is becoming increasingly competitive
Due to short supply and high demand, buying a home has become a fierce process. Homes are selling fast, and buyers need to be quick in their offers to secure a purchase. Since April of 2021, Homes have been selling in less than 20 days, giving buyers very little time searching and considering their choices.
- Housing prices are still rising
Housing affordability has been low as of recent leading prices to rise by almost 20% since the beginning of this year. Due to the low inventory of housing, costs are expected to increase. Sellers can expect more profit in their sales, while buyers may need to consider their budgets in the coming months.
- Interest rates are at an all-time low
Low rates are a good sign for buyers and sellers. In January, a fixed-rate mortgage was only 2.74%. With the shortage of homes and rising prices, Buyers will take advantage of these low-interest loans to buy more houses faster, and sellers will have no trouble finding offers for their homes in a short period.
- Virtual real estate has become a desirable way to sell
With everything going online since the rise of COVID-19 virtual real estate has found a new spotlight. Sellers can now post their homes on websites or hire a virtual agent to help with the hassle of selling, all with a few clicks. Buyers can also take advantage of the convenience of online selling by browsing multiple listings much faster and making offers all from the comfort of their own homes.
- The Biden administration is focusing on housing
The president and his administration have been taking housing issues very seriously. The SECURE Act is once again in Congress; this bill would enable remote notarizations, which would aid the online housing market in closing home sales digitally. Biden has implemented a rental assistance program as part of his American Rescue Plan to assist renters who have been affected financially by COVID-19.
- Foreclosures are beginning to resurface
In the last month, one in every 12,700 homeowners filed for foreclosure. Filings are up 23% from last year, and states like Florida and New Jersey have seen some of their highest foreclosure rates. Though these numbers may sound alarming, these statistics come after the foreclosure moratorium ended, so these results are expected as banks are working through backlog built up during 2020.
- Extension on protections for renters and homeowners
With the eviction moratorium extended until July 31st, 2021, to prevent a historical wave of mass evictions, renters and homeowners can rest without fear of losing their homes. This extension gives those with financial hardship due to the pandemic more time to get back on their feet. The Biden administration has said this will be the last extension on the moratorium.
- A housing market crash is unlikely
Experts say it’s unlikely we will face another housing crisis as we did in 2008, despite a current economic recession. With record numbers of equity for property owners that protect them in their home losing value, stricter lending and borrowing standards, low-interest rates, and high demand, it seems the housing market faces a prosperous future.
- House flipping is becoming less profitable
Returns on investments for house flipping have been dropping. Homes are selling at astronomical rates; however, flipped houses have seen a 2% drop in profit. Flipping profits dropping could be a marker that the post-recession housing boom is coming to an end, according to ATTOM Data Chief Todd Teta.