Housing is Hot Despite Covid~
2020 was a roller coaster for all including our real estate market. Our spring was slow due to quarantines and uncertainty. However, the summer, fall and winter, sure made up for it. Our market has a trifecta of factors that propelled it beyond our expectations. 1) Historically low interest rates allowed many first time buyers to enter the market and motivated others to make real estate moves. Low rates fueled our demand and helped our sellers market become even more competitive as more buyers entered the market. Nationally, first time home buyers entered the market at a pace not seen since there were buyer incentives given in the early to mid 2000’s. Despite our home prices increasing the affordability index remained strong due the lower rates. Over a third of my own business this year was first time homebuyers which included all ages and demographics deciding to become homeowners! It was exciting. 2) Preferences changed this year with the new climate of working from home and school quarantines. Many families and couples decided they needed more space. This need is fueling a push to the suburbs and foothills where homes typically are larger and often have more outdoor spaces. 3) Quarantines and major life changes have shaken up many people. I have experienced homeowners evaluating where they want to live and what lifestyle they desire. This has caused many people to move both in and out of our state to follow their dreams. Additionally, many employees have realized their working remotely may be permanent and we are seeing buyers choose to move to their ideal locations often in the mountains.
2020 By the Numbers~ Despite the tumultuous nature of our year, real estate proved to be a high point. With the dollar weakening real estate investors at all levels saw this year as an opportunity to take advantage of adding real estate to their portfolio. The Denver Metro Area saw an average increase of 12% year of year for home values which was up significantly over 2019 which saw a cool down of the market. Home sales were up 7% over 2019 and we ended the year with only 3,000 homes active and less than one month supply of inventory available. *Stats courtesy of DMAR.
2021 Predictions and Trends~ This year’s real estate market looks to be more of the same. Strong buyer demand, low inventory and low rates. However, here are a few of the trends we think we wills see more of.
-High tax cities across the US will see less growth and migration away from their markets. With more plans for companies to allow employees to permanently work remotely, many high tax cities will see a talent drain as people relocate in search of cities with a lower cost of living. Cities like Austin, Charlotte and Tampa are benefiting from this according to Jarred Kessler with EasyKnock.
-Cities with high percentages of Tech and Government jobs will see growth as well as midsized cities.
-Generation X and millennial buyers are expected to play a large role in the housing market. According to CoreLogic Insights Blog between 2018 and 2028 these two generations are predicted to add 25% of new households. The average age to buy a first home is 33 years old.
-New construction starts will continue to increase. They are expected to grow another 9% nationally in 2021. Homebuilders are definitely increasing prices due to demand and rising cost of supplies and lack of inventory of supplies.
-Inventory is predicted to increase by mid summer. We have an extreme deficiency in homes available both locally and across the nation. Experts believe a few factors may increase our inventory. Consumer confidence may increase as Covid numbers decrease or widespread access to the vaccine occurs. Additionally, there may be more distressed properties potentially hitting the market later this year.
-Showing and buying homes in a year with Covid has proved interesting. We have adapted to assure safety standards at all levels. We are increasingly using technology to assist us. Showings in person are occurring but can also be done via a virtual walk through or FaceTime. For closings buyers can sometimes e-sign or sign their documents from the convenience of their car.
-By the end of 2021 Redfin predicts the homeownership rate will rise above 69% for the first time since 2005 and appreciation rates nationally to be between 7 and 10%. Here’s to an adventurous 2021!