Housing Market Forecast Post COVID-19

 

WHAT COULD THE REAL ESTATE MARKET LOOK LIKE POST COVID-19

While everyone is looking forward to a 2021 that looks significantly different from its preceding year, the coronavirus pandemic and the ensuing financial crisis have caused immeasurable hardship and pain across the U.S. According to Realtor's Clare Trapasso, strangely enough, the crisis has also served as a turbocharged shot to the housing market. "Feverish buyers rushed into the market just as COVID-19-shy sellers pulled their homes off—forcing buyers into bidding wars and pushing prices up to new heights. Recession be damned," she says.

While vaccines are the bright light at the end of this tunnel, home buyers and sellers are eager to get a barometer check on the real estate market — will prices finally cool off? Will the big cities come back? And when will more homes finally go up for sale?

"Even when America reaches herd immunity, it's not as if the world—and the housing market—will instantly return to some semblance of pre-pandemic normal," says Trapasso. "The good news for buyers is more homes are expected to go up for sale. So desperate buyers won't need to put in offers and waive contingencies before they've even finished touring the properties." inventory, however won't increase overnight.

Trapasso quotes Ali Wolf, chief economist for Zonda, a real estate consultancy: "Some people will feel comfortable listing their home during the first half of 2021. Others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022."

It's logical that many sellers held off on listing their homes during the pandemic — particularly the more vulnerable baby boomers who didn't want to risk getting sick through an open house or having someone infected touring their home. Once vaccinated and the risk of serious illness is lessened, they're more likely to go ahead with their moves. To top that off, builders are now very busy ramping up construction despite the pandemic. "Builders could erect a million single-family homes and townhouses next year," predicts Robert Dietz, chief economist of the National Association of Home Builders. "That could help to ease the crunch. The growth in single-family homebuilding will continue.

As for waiting for prices to go down, don't hold your breath. The big difference will be an increased supply taking some of the pressure off the market resulting in fewer bidding wars as buyers have more homes to choose from. "As the economy picks back up and people are no longer afraid to be within 6 feet of one another, they'll get new jobs, promotions, and raises. That will give them the cash they need to become homeowners or trade up to a larger abode," says Trapasso. "Many folks who remained employed were able to contribute more to their down payment savings since they weren't going out to eat or on vacation. Plus, there are simply more first-time buyers out there. The millennials are a larger generation than the previous one, and as they get older, they're settling down, having families, and buying real estate.

While it's widely believed interest rates might rise, families are less likely to return to the cities, opting instead for more square footage for their money in the burbs. Thanks to Zoom and other technology, they're likely to stay that way, at least for the foreseeable future.