Last year was a wild year for the housing market. Home prices soared, interest rates dropped, and inventory dwindled—hello seller’s market! It was one of the most active real estate markets in a decade. After all of that, what can buyers, sellers, and agents expect from the market as we go through 2021?
What should I expect as a buyer?
It’s likely that the market will stay a seller’s market this year. Last year, the average home price rose 15.4% to $364,000 and it’s likely to continue to rise—although not as sharply. Contributing to rising prices is record low inventory. Nationally, inventory is down 30%. There are only 1.9 months of supply – which is the lowest level seen since 1999. For reference, a balanced market usually has 6 months of supply. Just a small drop, huh?
With so few homes listed, it’s harder for all interested buyers to find a home they love. And when a good property is listed, fierce competition is sure to follow. While inventory is at historic lows, demand is at a high not seen since 2005. To counter pandemic economic challenges, the Fed reduced interest rates in 2020 to all-time lows. This drove lots of aggressive homebuyers into the market. These low interest rates will most likely continue but slightly higher in 2021 – between 3.1-3.3%.
All of these factors mean you’ll face greater competition for fewer homes. So, you need to stand out from other buyers to secure your dream home. Consider using Ribbon’s Cash Offer program. Ribbon can upgrade your financed offer into a seller preferred cash offer – increasing your chances of standing out and getting your offer accepted.
What should I expect as a buyer?
This year will be a fantastic year to sell your home, as the market will continue to be more favorable for sellers. You could potentially see a 10.5% increase in your home value by year’s end. On top of the price gains from 2020, you should be able to sell your home for a good amount more than you bought it.
Not only will you sell for more, you’ll be able to sell your home quicker than ever before. Demand for homes spiked in 2020 and this trend is showing no sign of slowing down this year. As such, home sales could rise 7% in the next year. Increased demand means homes spend less time on the market. In 2021, homes are already on the market for 10 fewer days than a year prior.
While all homes are selling for higher prices faster, it’s likely that buyers will continue to prefer a move-in-ready home as buyers are less likely to want to go through the hassle of fixing up their new home. And buyers are looking for specific spaces in 2021. With the rise of remote work and schooling, home offices and large outdoor spaces are more in demand than ever. In fact, buyers are also looking for bigger homes this year than they have in the past. Spending more time at home has made many buyers realize how much more space they need. It has also shown the pitfalls of the open concept floor plan. Buyers want (and often need) more separation between themselves and their families. That way, buyers can work in peace while their kids have virtual school in another room. Have a few of these features? Ensure it’s front and center in your listing.
What should I expect as an agent?
Much like 2020, you can expect to have a busy year in 2021. More buyers are looking for homes and many sellers are eager to cash in on the once-in-a-lifetime 2020 appreciation. However, more buyers than sellers in the market will make it difficult to find the right home for your clients. This can also make it more difficult to secure listings. So, as a seller’s agent, you’ll need to rely on your network and great marketing to get your listings.
Your clients will also likely continue to be Millennial and Gen Z buyers. Millennials (now in or close to their 40s) are the largest generation in history and many have joined the housing market. The older half of the generation is likely to be trade-up buyers. While younger millennials and Gen Z buyers tend to be first-time homebuyers.
As generations used to solving problems themselves (with the help of Google), Millennials and Gen Z clients don’t want to be boxed out of the process when buying or selling. That’s why you’re likely to see more competition from iBuyers and other non-traditional brokerages. iBuyers make it fast and easy to sell a home – eliminating much of the stress for sellers. To compete with iBuyers, you need to offer a selling experience that’s just as stress-free and high-tech.
One way to do this is with Ribbon’s cash offer program. Many sellers worry about selling their home before they can buy a new one. With Ribbon, they can buy a new home before selling their existing one. That’s one less thing for your sellers to worry about – which can help you compete with iBuyers.
Wrapping it up
The 2021 housing market will slow slightly from the chaos of the 2020 market. However, there will still be more buyers than homes available, low interest rates, and rising prices. As such, the key to navigating the 2021 real estate market as a buyer, seller, or real estate agent is using the right technology.
If you’re looking to boost your chances as a buyer, sell worry-free, or create a seamless experience for clients as an agent, consider using Ribbon Cash solutions. Learn more about how Ribbon can help you have a great 2021 today.