A Look at the Real Estate Market in 2020 and 2021

The strength of the real estate market in 2020 came as a surprise.

Demand unexpectedly jumped:

  • More time at home revealed changing needs in the size and functionality of the living environment.
  • The flexibility to work from home opened the door to more appealing and lower-cost locations.
  • Interest rates remained at record lows, motivating action.

Supply rapidly declined:

  • The pandemic limited the willingness of many homeowners to enter the market.
  • New construction starts haven’t kept pace with population growth since the Great Recession of 2009.
  • Employment uncertainty or other financial strains disrupted the ability of owners to consider a move-up purchase and for renters to become buyers.

The imbalanced supply and demand pushed home price appreciation to around 8%.

Looking forward through 2021, the real estate market could continue this trend; though it means overcoming some anticipated obstacles:


1. Will demand remain strong?

  • Buyers who postponed their moves due to COVID-19 will likely enter the market in the early spring.
  • As pandemic restrictions fade, increased employment and wages create more qualified buyers, especially if mortgage interest rates can remain low through the summer.

2. Can supply rise to meet demand?

  • As vaccinations and treatments reduce the risk and slow the spread of the pandemic virus, sellers previously fearful of contact are ready to move.
  • With millions of mortgages in forbearance, many borrowers will be forced to sell unless the foreclosure and eviction ban is extended past June.

This predicts a continued but slowed rate of home price appreciation and normalized volume of sale activity in the coming year, with supply and demand approaching balance over the course of 2021.


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