2020 presented a record year for real estate so what can you expect in 2021? Here's a quick overview of some hot topics for real estate and California.
1. Inventory shortages.
Across California and here on the Monterey Peninsula, inventory is at an all time low and short term expectations are that it will remain so for at least the first half of the year. Expect stiff competition, multiple offers, quick sales and higher home prices.
2. Increase in Foreclosure Rates:
Forbearance allowed home owners to delay their loan payments if they were laid off or unemployed. Many banks moved their payments to the back of the loan but some banks required a balloon payment at the end of the forbearance period. There will be some home owners who will be forced to foreclose but due to current market values, more will be forced to sell their home and perhaps leave with some equity. Other areas of the country may see an increase in short sales and foreclosures depending on their local real estate market.
3. Low mortgage rates will continue to encourage refinances and purchases:
Lower interest rates allow higher loan amounts so people are taking advantage of refinancing, remodeling or moving up. First time home buyers also have the opportunity to get into some markets, something that was not possible over a year ago.
There are some concerns that mortgage rates could start increasing from record lows this year. We'll have to see what happens.
4. COVID surges won't impact real estate in the same way
10 months of COVID has given the real estate community time to adjust. COVID protocols are in place and because we are seen as an "essential business" transactions should not be interrupted if additional surges occur. Virtual tours, digital closing technology, and remote showings are all methods that real estate pros have increasingly turned to in the pandemic.
5. Affordability challenges will continue
Prices continue to rise across California and here on the Monterey Peninsula. Although interest rates give hope to some buyers, lack of inventory and increased competition continue to make home ownership a difficult goal for all ages. Another issue is saving for a down payment when rent and living expenses are so high. There may be some relief with President Biden’s proposed $15,000 down payment tax credit for first-time buyers. The tax credit—which, as proposed, will be able to be used at the time of purchase—has been proposed as an extension of the Recovery Act’s temporary tax credit.
Source: Real Estate Magazine-Top Agents Insight Q4 2020 (Homelight)