Twelve months ago, the forecasts for 2020 called for flat price growth, scarce inventory for first-time buyers and climbing mortgage rates. Then COVID-19 arrived and upended all of it.

From mid-March to mid-April, homebuying essentially stalled as would-be sellers held off. Some homeowners took advantage of record-low rates to refinance instead of moving. After that pause, though, the market heated up quickly. Demand outstripped supply, and prices climbed in almost every region, with San Francisco a notable exception where some prices slipped.

The housing market has since settled into a "new normal." My outlook for 2021 is based on what we saw this past year and the growing optimism that a COVID vaccine will soon be available.

1. Home Values Should Keep Climbing, at Least for Now

According to CoreLogic, national home prices hit a six-year high in September, rising 6.7% compared with a year earlier. Idaho saw gains of about 12%, while Maine and Arizona each rose roughly 10% to 11%. Even New York, hit so hard early in the pandemic, posted an increase of about 1.5%.

Still, several forces could cool things off. Slower economic growth is expected to bring asking prices down by next September. A wave of foreclosures could arrive by mid-2021. And homeowners who put off selling in spring 2020 may finally list in spring 2021, adding to inventory. Together, these could level off price growth, though only time will tell.

What This Means for You

  • Sellers: List as early as you can.
  • First-time buyers: Waiting a little longer may bring more options and less competition.

2. Construction Is Ramping Back Up

Depending on each state's COVID restrictions, many building projects were put on hold in 2020. That slowed new construction inventory as well as mixed-use residential and commercial projects designed to breathe new life into neighborhoods. Housing starts began climbing in October, so expect 2021 to resume where those 2020 plans left off.

What This Means for You

New construction tends to fall into two groups: luxury homes and 55+ communities. If you're selling a higher-end home or a home in an area that attracts active adults, you may be competing with new builds this year. It's also smart to find out what construction and commercial projects are planned near you. If they move forward, they could make your property more desirable. Buyers who want a brand-new home will have more to choose from. If you'd like to talk strategy, let's set up a consultation.

3. Remote Work May Be Here to Stay

Some industries are planning to bring people back to the office, but many companies have discovered that remote teams work well and cut costs. If businesses stay remote, neighborhoods near office parks, downtown startup hubs and areas once prized for an easy commute could see less demand. Areas near shopping districts may lose retailers as the economy slows, though economic relief or new businesses could turn that around. Homes close to outdoor recreation may start to look more attractive than those near office parks.

Remote workers can live almost anywhere. Back in 2017, it was reported that San Francisco-based Zapier offered employees $10,000 to relocate out of the area. Rural areas known for natural beauty and outdoor activities, affordable suburbs near major cities and coastal communities could all see a surge in interest.

What This Means for You

  • Home offices are essential. Formal dining rooms, guest rooms and entertaining spaces aren't as high on buyers' lists.
  • Tech touches matter. Buyers are noticing good video-call backdrops, strong internet and cable service and smart home features.
  • Media rooms are a plus for relaxing and keeping kids entertained.
  • Treat outdoor space like another room. Fire pits, comfortable seating, outdoor kitchens, outdoor entertainment setups and pools all appeal to buyers.
  • Vacation towns may gain full-time residents, and suburbs with strong schools, reasonable prices and easy access to big cities may welcome new neighbors.
  • Sellers should market to newcomers by including helpful resources for people relocating from out of the area.
  • Buyers may face more competition in appealing areas that were historically affordable because they were far from cities or had limited job opportunities.

Let's Plan Your Next Move

Whether you're buying, selling or both in 2021, reach out and I'll guide you through every step of the process.