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Economists and investment experts usually pay close attention to the real estate industry as a significant indicator of investment and economic news. Though real estate market growth slowed down during the 2nd, 3rd, and 4th quarter of 2020, it is still a healthy industry that’s prospering. Indeed, real estate signage is a common thing in most neighborhoods, and most real estate agents and sellers are reporting positive growth. If you’re looking for REP Calgary homes or intending to sell a property, here are essential trends you must keep in mind.
1. Millennials still represent the largest potential pool of first-time property buyers
Over 70 million millennials comprise of large demographic of property buyers, particularly those acquiring homes and other types of properties. This generation is surpassing baby boomers who burst into the real estate industry in the early 1970s and 1980s. Considering that a larger number of millennials are now earning a decent income, most economists and investment experts believe that millennials are likely to drive growth in the real estate industry in 2021.
2. Most conventional lenders are making it easier to purchase properties
Underwriting are loosening, making it a lot easier to purchase a property. Many conventional lenders are lowering the amount required for the down payment and the required credit score. That means borrowers, even those who were turned down in the past, can acquire mortgages via conventional lenders to finance property construction or acquisition.
Given the increase in rental costs, first-time property buyers are more likely to benefit from low down payment requirements and somewhat liberal debt ratios. Keep in mind that getting a mortgage may not be easy for everyone as it may have been before the 2008 recession. However, the mortgage landscape is currently more welcoming than it was half a decade before.
3. Low-priced properties are in high demand and getting multiple offers
High-priced property sales have slowed down, but lower-priced properties haven’t. With millions of young people ready to dive into real estate investments, this demand is likely to steepen the level of competition in the real estate industry. Another contributing factor to the shortage of modest properties is that many older adults are opting to stay in their current homes longer.
4. Mortgage rates are likely to remain low for quite some time
The low and stable cost of lending stimulates growth in the real estate industry. Though it is impossible to know how long mortgage rates will remain low, there’s minimal evidence that they will spike, particularly with the ongoing economic and political issues.
5. Second-tier cities are likely to experience as property buyers are looking for cost-effective options
According to a Forbes report, the trend of searching for a secondary option rather than spending too much money in top housing markets is expected to continue in 2021 and beyond. Major corporations are driving such trends by relocating their offices to more affordable locations. A perfect example of this concept is the recent decision by Toyota to move out of California and establishing their offices in Dallas.
6. Property prices & turnover rates are still on the rise
The COVID-19 pandemic left the housing inventory in falling supply in 2020, causing a sharp spike in prices. Economists and investment analysts believe that this trend will remain in 2021, because there is still a shortage of available properties with higher-than-normal demand. For property sellers, this is good news. After all, the median property sales are expected to increase, and the property turnover is likely to be better than ever. The expected time a property will stay on the market is about 14 days less than the previous years’ numbers.
7. Real estate is going virtual
Prior to the COVID-19 pandemic, many people enjoyed perusing online to view homes and other types of properties available for sale. They still enjoyed crowded open houses and the luxury of visiting various neighborhoods in search for high-quality homes. But with physical/social distancing and other infection control measures in play, virtual real estate is becoming a norm. Property sellers and real estate agents are now using the live stream for open houses. They also place more emphasis on virtual tours, photographs, and videos when it comes to showcasing their property listings.
Summary
2020 was a year characterized by economic uncertainty, and many people speculated that the property market would crash in 2021. To quell your concerns and fears, a property market recession or crash is unlikely this year. At first, the coronavirus pandemic and strict infection control measures delivered a devastating blow on the real estate industry and threatened its survival. However, real estate markets are now seeing gradual improvement as the affordable cost of borrowing has built property buyer confidence.
So much uncertainty continues to affect our jobs and how day-to-day lives. However, the economic forecasts, particularly in the real estate industry, show a positive change.