The real estate industry can be volatile, complex, and rewarding. Over the past year, many experts have watched in awe as the housing market took off around the country despite the pandemic. However, understanding the market is key to success, whether you are a real estate agent, investor, or searching for a new home. So, join us below for the top real estate trends and statistics of 2021 so far.
Top Real Estate Trends and Statistics of 2021
Still reeling from the unexpected real estate market in 2020, no one was quite sure how 2021 would turn out. So far, the real estate trends and statistics continue to surprise us. While every location’s market will vary, check out some of the top overall trends below –
Home Prices Continue to Rise
Among other factors, supply and demand drive the housing market. In 2021, a strong seller’s market has taken hold. As a result, the national inventory of available listings dropped while the average price of a newly listed property is up over 13%, according to Zillow. Additionally, some of the major metropolitan areas such as New York and Dallas have seen prices jump as much as 30%.
Listings are Flying Off the Market
Competition among homebuyers is fierce, and as such, listings do not linger on the market for long. As of June 2021, homes were only lasting a median number of 37 days on the market. To put that into perspective, that compares to around 70 days the previous year. Moreover, as the pandemic continues to wane, buyers are out in force and looking to take advantage while rates are still low. Therefore, the demand in summer 2021 sees property go quicker than ever.
Interest Rates Remain Comfortably Low
Since the pandemic’s start in 2020, interest rates on 30-year fixed-rate mortgages remained around 3%. Even as the economy began to recover in 2021, rates are still favorable for new home buyers. Thus, more individuals and families can afford to buy at lower rates, and they are jumping at the chance. In turn, this increased demand is fueling the shortage of listings and increasing prices.
Rental Rates Are on the Rise
So far in 2021, it seems that the cost to rent is increasing. That said, location plays a major role in rental rates; national averages are up 9.2%, according to Apartment List. In addition, prices will likely rise further as occupancy rates remain high, lowering the supply of available units. However, bargains are still out there in places like Illinois, one of the 15 states that saw a decrease in rental rates.
Single-Family Outperforms All Other Sectors
Reports from the Urban Land Institute indicate that market conditions will rebound in 2022. One of the top real estate trends is that single-family homes will outperform all other sectors, including commercial, retail, and rental. Thus, despite rising costs and slowly rising interest rates, demand is unwavering.
Top 2021 Homebuyers are Gen X
According to data from the National Association of Realtors, individuals born between 1965 and 1979 made up the largest group of homebuyers in 2021 at 24%. In contrast, this generation also made up the largest group of sellers at 25%.
Median Home Prices Steadily Rising
In Quarter 1 of 2020, the median sale price of a home in the US was $329,000. That said, that number steadily rose to nearly $375,000 as of Quarter 2 2021.
People Still Migrating to the Suburbs
At the height of the pandemic, a large percent of the workforce was now remote. In other words, no commute to worry about, and they could work from anywhere. This flexibility, along with a need for added space being stuck at home, saw families and individuals flocking to the suburbs. That said, the demand for single-family suburban houses shows no signs of slowing down.
Real Estate Investment Opportunities in 2021
The real estate industry presents a wealth of opportunities for savvy investors. However, post-pandemic markets are shifting. It is quite possible that a location that showed growth potential and plenty of options before the pandemic is not the same a year later. In 2021, investors have had to remain flexible, optimistic, and determined to search for the most profitable investment ventures. With that in mind, take a look below at some of 2021’s best real estate trends and investment opportunities.
Fill the Gap with Fixer-Uppers
Fixing up houses to flip or rent is not a new concept for investors. However, it can become more or less popular based on market conditions. That said, 2021 saw prices rise along with low inventory, making finding a deal a bit more time-consuming. Investors with the necessary capital to move quickly on available units could help fill an important need in the real estate market. In addition, as inventory fights to keep pace with demand, the desire for newly renovated homes is on the rise. Therefore, fixing to flip or rent could be a lucrative investment strategy for owners.
The Wave of Foreclosures is Coming
The pandemic has hit every industry and while aspects of the real estate market remained strong. Sadly, some homeowners struggled and now face possible foreclosure. When the pandemic began, the federal government stepped in with a program allowing financially strapped owners to delay payments. That said, that will end in September 2021, and homeowners will either have to pay, sell, or face foreclosure. As investors, this wave of foreclosures is both a housing crisis and an opportunity. Although the foreclosure process takes time, investors can be on the lookout for this real estate sector to grow heading into 2022.
Reimagine and Repurpose
To be successful in real estate, understanding the numbers and ROI potential is vital. That said, an eye for a property’s potential is also a crucial aspect of successful investing. For example, brick-and-mortar retail shops were hit hard by the pandemic, along with some smaller hotels and office buildings. As an investor, reimagining these spaces and repurposing them in new or different ways could unlock a profitable opportunity. While this route is not without its challenges regarding zoning and local regulations, the long-term impact may be well worth the effort.
Maximizing Investment Potential with Professional Management
For investors, the real estate industry offers a wealth of opportunities. That said, chasing deals, organizing renovations, and networking takes a significant amount of time. Therefore, if you own rental units as part of a passive income strategy, finding the time to market, screen, and manage tenants is a challenge.
Fortunately for rental owners, professional property management provides the solution to a lack of time, know-how, or desire to manage the daily stresses of rental units. At Professional Property Management of Northern Virginia, our team manages an eclectic mix of single-family houses, multi-family buildings, and commercial units. So, if you are an investor looking to maximize profit potential in 2021 and beyond, give us a call today.