After last year’s surprise pandemic housing boom, buyers, sellers, and real estate agents are all wondering what the market will bring as COVID-19 begins to wane and vaccinations make it possible to return to some kind of normal.
Will we begin to see more inventory coming into the market, ending the historic shortage? Will prices level out? Will buyers begin to back off as mortgage rates climb?
While we can’t know the answers to all these questions for sure, there are some good indicators of what’s to come. Here’s a glimpse of what to expect for the real estate market this summer.
The seller’s market shows no signs of slowing
According to the Top Agent Insights for Spring 2021 report by HomeLight, 93% of agents surveyed in Q1 of 2021 said it was a seller’s market.
Across the country, low inventory, rising home values, and a glut of eager buyers mean that sellers are in an almost uniformly strong position. The majority of agents also believe that home prices will continue to rise even as inventory levels increase—just not at their current rocket-fueled pace.
Buyers will continue to enter the market throughout the summer
After the year we’ve all had—working, schooling, relaxing, and playing at home—countless families are looking for more space and better amenities.
Backyard pools, which once were generally seen as a liability when it came to selling a home, are now adding value. Outdoor space is increasingly important. And professionals who are looking at working from home indefinitely want a dedicated home office space (and if it has a door that closes, so much the better!)
Spring and summer are traditionally popular times of the year for moving, anyway, and that will likely continue to be the case in 2021. This is led in part by the increased mobility that the pandemic has strangely offered many—from families who decided to embrace homeschooling, to employees at organizations that have embraced remote work permanently.
Another group of buyers continuing to inflate housing demand? City dwellers. Whether because of remote work, being stuck in their apartments for a year, or pandemic-related fears, the desire for a less-dense, more suburban environment has spurred thousands of former renters and apartment dwellers to become first-time home buyers.
Vaccine distribution could encourage more sellers to list their homes
Plenty of would-be sellers in 2020 held off on listing due to pandemic uncertainty, both economic and public health-related.
As vaccine distribution ramps up, 26% of agents surveyed in HomeLight’s report believe that those sellers will begin to re-enter the market, slowly adding inventory and easing some of the shortage.
Growth will shift from big to small and mid-sized cities
While some of the changes to the real estate market that the pandemic has wrought will fade away with time, one that agents believe will be permanent is the population shift from big to small and mid-sized cities.
With affordability even more of a problem than ever due to the inventory shortage, and the new possibility that one can easily work a big-city job with a big-city salary, but from a small town with small-town housing prices, more city dwellers are choosing the suburbs or smaller-sized cities with greater housing affordability.
Tools like home affordability calculators are making it easy for would-be buyers to compare what they afford in, say, San Francisco versus St. Louis—and many of them are choosing St. Louis. It remains to be seen how this large-scale reshuffling will shake out in the long term, but for summer 2021 and beyond, expect to see much greater buyer interest in homes that are outside urban areas.
Summer 2021 looks to be, in many ways, an extension of the hot market of 2020. If you’re thinking of selling, now’s the time!