Many people are curious about how the housing market will perform in 2021. We have seen many sectors of the economy crushed by the coronavirus, but not real estate. On the other hand, people have been waiting for the real estate bubble to pop for years now. Will this happen next year? Nobody knows for sure, but we can look at a few indicators to see what may happen and make our best guess. Keep reading to see my 2021 housing market predictions for Atlanta!
Demand Remains Strong
While 2020 brought on a lot of pain for much of the economy, the housing market was on fire partly due to high demand from home buyers.
Many emerging trends contributed to this, including record-low interest rates, stay-at-home workers needing more space, and a gradual recovery for several sectors of the job market.
There is no indication that these trends will slow in 2021.
I expect that the economy will recover significantly in 2021 as the COVID vaccine is distributed, and that interest rates may rise only a little. More companies will see that their employees are happier working from home, saving them money on office space.
Therefore more people will move out to the burbs since commute time is not a factor. Expect prices in the burbs to increase more than in the inner metro areas.
Housing Supply Increases
I think the average number of houses on the market will increase, but will still not be able to meet buyers’ demand.
Inventory is SO LOW right now that I really don’t see how it can go too much lower. As vaccines become more readily available, sellers will feel more comfortable putting their house on the market.
Trade-up homebuyers won’t mind paying a higher price with low interest rates and the substantial equity payoff they get from selling their starter home.
I also see the eviction moratoriums and mortgage forbearance programs ending by the second quarter of 2021 – so around the first of April. I think this will cause an increase in foreclosures and other distressed properties to hit the market.
These properties will be good for investors and people looking for fixer-uppers.
Home Prices Go Up (Even More!)
All of this taken together means that home prices will probably continue to rise in 2021, but not as much as we have seen in 2020.
High prices are a result of high demand and low supply. As housing supply increases, and we see more distressed homes on the market, then I think prices will stop rising so quickly.
If home prices do start to go back down, I don’t think this will happen until the end of 2021 or maybe into 2022. But it’s hard to say for sure.
What I do think will happen is that prices in the Atlanta suburbs will increase more rapidly than inside the perimeter. People are moving farther out to bigger houses, so the markets remain strong anywhere within an hour of metro Atlanta.
This trend is not as prominent as other metro areas, however. Atlanta is still relatively low priced compared to most of the other large cities.
We’ll See More New Construction
New housing has been challenging for developers over the past few years due to rising supply and labor costs.
This has made it hard to build new houses that are also affordable, but I think this will start to change in 2021.
Local, State, and Federal governments all see the lack of affordable housing as a drag on the economy, so I think we’ll see more incentives to homebuilders through tax rebates or other measures to make it more attractive to build new homes.
What Do You Think?
These are just my predictions for the 2021 housing market, but I don’t have a crystal ball! Are you confident that the housing market will show continued strength? Do you think a market crash is imminent? Let us know!
If you are worried about what is going to happen to the real estate market as a whole, or if you are just worried about what to do with your property – reach out and let us help! That’s what we are here for. We promise no hard sells – just friendly conversation.