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Q1 2021 Real Estate Market Trend

Overview 

Q1 has been exceptionally incredible in terms of coping with last year’s sales. With the low mortgage loans and interest rates, homeowners and firs time homebuyers took it upon themselves to take advantage of the opportunity and move into homes that fit their needs. This said, sales are expected to increase as we enter Q2 of 2021, especially with the looming Summer sale just around the corner.  

Experts believe that sales would most likely boom in the mid-year, but nothing is sure until the trends show a more balanced movement in the market. As restrictions start to lift and vaccines begin to roll out into the economy, the market slowly adjusts to anticipate a more active progress. 

High Housing Sales 

Despite the pandemic’s effects on housing sales last year, Q1 surprisingly surpassed the expectations of most experts and professionals. Q4 2020 peaked sales after months of having an all-time low on sales. After having that sudden rise in sales, it remained constant and stable until January of 2021. Mortgage loans and interest rates are still low. Still, with the economy adjusting to the current situation, there have been plenty of ways to combat the effects of the pandemic, and people who had previously planned on looking into and buying new homes are taking advantage of every opportunity they can find.  

Almost two-thirds of 60% of the population are starting to migrate to remote or isolated work setups. Most of them are looking for houses that have spaces dedicated for a home office or study area for families who intend to have their children have online classes. These factors – alongside the housing shortage – made March of 2021 the hottest month in housing history. The national US property broker Redfin forecasts a record of $2.53 trillion worth of home sales in America in 2021. To put into perspective, the record would roughly be equal to the value of Amazon.com and Facebook combined. The combination of the rising demand for homes and the lack of available homes to compensate for the needs of potential homebuyers triggered the increase in home prices. As mortgage rates rise and home prices may grow slowly, it would put the market in a more stable and balanced situation.  

With this, we should expect the real estate industry to be back on its feet strong and most likely be better than the previous years. Experts believe 2021 to be even more active for the housing market compared with last year since we already have an initial insight into the future of the economy. Employers would soon have a much clearer view on remote work and having more stable policies, the economy is recovering, and mortgage rates remain low. These factors would attract more buyers to the market this year and would probably continue until early 2022. 

Affordability Issues 

As the shortage of supplies continues to lag from the demands of the market, new home prices increase to compensate for the low numbers. A growing number of builders are finding ways to limit sales to manage the supply chains. One of the main reasons for the low inventory of housing sales is the price increase on housing materials. Raw materials like lumbers, appliances and other building materials need physical labor to produce. But with the current setup where people tend to chose jobs offering remote access and isolated workspace to avoid any possible contact with the virus, production has been slow and eventually affected housing prices of new homes. The high demand low supply affected housing prices of new homes to jump up to 20 percent on a year-over-year basis, harming the homes’ affordability. Experts suggest that policymakers should find ways to improve the current supply chain by facilitating domestic production or maybe even suspending tariffs to allow more imports and give builders more affordable materials to decrease the costs altogether.  

Conclusion 

Q1 gave hope to a more stable real estate market as with the economy. If this trend continues, Q2 will more likely be as active as the past months, maybe even better. Hopefully, the trend won’t be as harsh as last year if it ever dips back down again. As the vaccines reach everyone, the real estate market, together with the economy, will surely be able to go back to a normal and stable state. 

June 2, 2021

Q1 2021 Real Estate Market Trend

Overview  Q1 has been exceptionally incredible in terms of coping with last year’s sales. With the low mortgage loans and interest rates, homeowners and firs time […]