2020 in Review and 2021 Expectations
Happy New Year!
As we close out the year, I want to provide an overview of the 2020 residential real estate market and provide my thoughts on 2021.
This past year was a big year for residential real estate with strong price growth and new home trends.
Home sales saw tremendous growth this year as consumers took advantage of low-interest rates. Likewise, being forced to spend more time at home, the desire to have one’s space increased.
This growth was reflected both at a national level and in Atlanta.
From January through November 2020, home prices grew 19% nationally, compared to 5% in 2019.
In Atlanta, 2020, home prices rose 18% compared to 7% in 2019. This growth was impressive, given that we were already in a hot market.
Fewer people were selling, too, driving down supply. National supply in November 2020 was at 1.6 months compared to 3.1 months in November 2019.
In Atlanta, November 2020 supply was also at 1.6 months compared to 2.9 months in November 2019.
This shortage was reflected in how quickly homes were selling. Nationally, homes remained on the market for an average of 11 days in November, compared to 27 days in November 2019.
Atlanta was no different; homes remained on the market for 11 days in November, compared to 26 days in November 2019.
2020 changed the way people shopped for homes and changed the priorities of what people looked for in homes.
Online home shopping accelerated as people toured homes virtually. Video conferencing was prioritized as agents walked clients through homes on video calls. As I have adapted to the changing markets, I now have the technology to provide even better services for clients hesitant to leave their homes.
Another significant shift has been in the way we close, becoming more virtual with remote mortgage approval, inspections, and appraisals.
Priorities also shifted. More people considered homes with dedicated office space, good outdoor access, and home gym or community gym access. This changed the way sellers prepared, staged, and listed their homes to sell.
Looking ahead to 2021
Due to low mortgage rates, we will continue to see a strong buyers market. Rates are forecasted to stay between 2.9%-3.4% for 2021. In the near term (Q1 2021), I expect 30 year fixed to remain around 2.7%.
With limited supply and high demand, I expect home prices to continue to rise over 2021, but not at the rate of 2020. Experts predict that more inventory will become available in the summer months as vaccines take hold and warm weather ensues.
I expect the same trends to continue to manifest in 2021. Buyers will be looking for more space. National Homebuilders Association expects an increase in median home size after a four year decline.
Demand for green space and more defined floor plans will take hold as more people spend time in their homes with activities like working and exercising.
Overall I believe we will have another bullish year for home sales. It will be a good year for both buyers and sellers and a year to take advantage of low-interest rates.
Are you ready to buy or sell your home in 2021? Contact me, and I can walk you through everything you need to know to make a smart long-term decision.