As 2021 reaches its tail end, it’s time to look forward and see what the future holds for the real estate market. As we slowly and anxiously return to the world still dealing with an international #pandemic, we have a lot of changes to consider.
How did COVID-19 Affect the Housing Market?
In February 2020, the number of home sales went up 6.6% from January in California. The median price nationwide for homes sold in February 2020 was $345,900, rising 6.3 percent from January. Once the pandemic hit, the housing market took a steep decline. Realtors canceled their open houses and half of all agents reported a drop in buyer interest. 54% of realtors had buyers who backed out from buying a home because of the coronavirus, and about 45% had sellers who backed out from selling property in March of 2020.
Less Urgency in Residential Real Estate
Many are predicting that there will be less urgency in the residential real estate space. One reason for this is that since the pandemic forced people to stay indoors in their homes most people will want to spend most of their time outside of their homes. Cities will see an increase in consumer spending and activities.
The Market Will Appreciate Significantly
On the other hand, despite the clickbait articles convincing people that a “crash is imminent!” There is a likely possibility that the market will appreciate at an above-average rate. Now that we’ve adapted to a work-from-home reality, remote work has turned the home into both the office and gym for most working professionals. With a shortage of housing units and with 72.1 million millennials in the U.S. in prime home-buying age we could see very high demand.
Subleasing To Increase
As more professionals are working from home and the need for commercial office fronts is dwindling, the demand for subleasing spaces increases. 25-30% is already working remotely. 1 in 4 Americans over 26% of the American workforce will be working remotely through 2021 and 22% of the workforce (36.2 Million Americans) will work remotely by 2025, according to an estimate by Upwork.
Rental Market Will Keep Growing
Something that has been inevitable from the start of 2021 and will continue to grow in 2022 is the trend of renting as opposed to buying. Housing prices are so inflated that most Americans simply can’t afford to purchase a home.
Continued High Demand
#Homebuyers are indeed struggling for several reasons, inventory is limited and property values have soared in 2021. Many home buyers have been priced out of neighborhoods they could previously afford. However, there is still an extremely high demand. Homebuyers want to take advantage of historically low mortgage rates. Freddie Mac projects that the average mortgage rate for a 30-year fixed loan will be 3.7% in 2022. It will be an increase from the current standing but it is still an optimistic figure.
The Increased use of Blockchain Technology
#Blockchain technologies usage in the real estate market is a very promising concept. We can see improvements in the property search process, expedited pre-lease due diligence, easy leasing and subsequent property and cash flow management, Transparent and relatively cheaper property title management, and more efficient processing of financing and payments.
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