Experts Predict The Sustainability of Real Estate Market for 2021

It’s that time of year again. Real Estate experts take a close look at market trends and dive into predictions for 2021. The housing market saw dramatic stats on both sides of the spectrum. While there are still a lot of questions and uncertainty about the market as a whole, industry experts reiterate that there is no comparison to previous recessions. The current downturn has more to do with the results of the pandemic itself versus the overall economy. More people are at home; the physical home has become more significant. There is one thing left unchanged. At the core of the industry lay one essential: everyone needs a home.

As the pandemic persists, how does real estate push through the highs and lows of 2020? A recent Forbes article reviews the pandemic-driven trends of the housing and mortgage industries while providing insight for the upcoming year. Many industry professionals are doing the same as they close out a wild year and prepare for whatever may come. It all seems to boil down to one topic: sustainability. Experts review the year and weigh in on what will change and what’s projected for 2021.

Higher Home Prices

There’s no shock that home prices have been on the rise for the last decade. Price growth continued to rise in 2020 despite an economic downturn. The increase stems from the lack of available homes able to supply the number of buyers in the market. The majority of experts do see this trend continuing through 2021 in most cities. On average, we could see a 5 to 6 percent increase in home prices. In some higher-cost areas like California, we could see up to a 7.6 percent gain, according to the California Association of Realtors (C.A.R.).

In October 2020, the median home value rose 5.8 percent nationally, and Zillow predicts home value can grow to 7 percent within the next year but at a more moderate pace. Listing prices also increased to double digits at 12.5 percent in October compared to last year. Following the upward trend, home price numbers will continue to rise as inventory stays tight.

Buyer Demand

There’s no guessing that buying demand outnumbers the number of homes on the market. The market started strong in January and February. Then, buying activity slowed once the peak of shutdowns took place in April. Many potential buyers and sellers held off delaying the usual busy Spring Market bringing a surge into the summer months. The Home Buying Institute shared that new homes sales surpassed 1 million units annually in August, which is the highest since 2006. Recently, the market has seen some stabilization in supply while demand stays strong.

With mortgage rates hanging around a low three percent average, home sales should remain steady. Millennial buyers will add to the buying pool. Over fifty percent of millennials say they intend to buy a home within the next year. Professionals predict activity will normalize around the spring season again and slow in the fall, as usual.

Digital Experience

Real Estate and Mortgage companies continue to navigate the ever-changing environment. Businesses had to make quick adjustments where necessary to maintain business – and have done so at exceptional levels.

Online platforms such as Zillow, Trulia, and Redfin reported a surge in home search activity this year. There has been an increase in listings that provided a virtual tour or a live stream from the agent. Mortgage companies relied on digital and secure electronic programs to share and sign important documents. The buying process became more accessible for interested buyers with limited in-person contact. Almost 100 percent of real estate professionals agree that work-from-home orders will stay common among companies. The appeal to buy a home from anywhere can help sales and sustainability within the market.

The industry has taken safety precautions this year, and some companies even got super creative to keep transactions in motion. Eighty-two percent of agents say that health and well-being will continue to be a high priority throughout real estate. And while face-to-face interaction may be necessary for some steps of the process, technology has been a vital tool for keeping the real estate sector afloat and thriving compared to other struggling industries.

We can expect to see similar trends integrated by more companies in 2021 with new enhanced systems launching for seamless transactions.

Economic Resilience

A Fortune article reflects on the ‘American Dream’ of owning a home and the troubling effects this year has brought to the economy and many individuals. The housing market found its footing much quicker than the economy. Now in month 10 of the pandemic, stay-at-home orders reinstated, no stimulus updates, and unemployment still at record numbers, many are questioning how it will affect the pace of economic rebound.

Ali Wolf, chief economist at Zonda, brings in the issue of affordability. She states: “the longer the pandemic continues or weaker the economy gets, the more of a gap there will be between those who can afford a home and those for whom the prospect of homeownership will become less and less attainable.”

Luxury home sales were up a whopping 41.5% as of October 2020, while sales for the most affordable homes declined 4.2 percent. Total available inventory remains down at 38 percent, and homeowners have hesitated to list their house, making it even more difficult for potential buyers to find a home within budget. Experts predict the trend will continue into the beginning of the year with hopes inventory will lighten up.

Affordability has been an issue for quite some time. Prospective buyers wanting to take advantage of the low mortgage rates will not get the full benefit if home prices are climbing because it would counterbalance the overall savings. Families who are looking for more affordable homes most likely have been hit the hardest by the pandemic. The difference between opportunities weighs unevenly for those with less wealth, creating an even wider wealth gap in 2021 in the United States.


The biggest take away for experts has been how the real estate industry will sustain the New Year. There are varied perspectives due to the general uncertainty. 2020 has seen uncommon numbers across the board. It’s unlikely this will repeat next year at the same rate. Zillow’s Richard Barton shares how industry professionals will have to prepare ahead; “…we have to move down the funnel to find the levers to drive the business sustainably, and we have these levers down the funnel that we are not yet maximizing or monetizing.”

Progress of a vaccine, unemployment and job growth, new policies, and regulations all play into what could shape the real estate and mortgage industries in 2021. No matter what, if you are a potential buyer or seller, pay attention to your local market. Your agents and brokers are there for you to answer any questions and help navigate.

Our team remains confident in providing you the best services as we transition to a new year. If you have any questions, reach out. I’d be happy to discuss further.

This article is intended to be accurate, but the information is not guaranteed. Please reach out to us directly if you have any specific real estate or mortgage questions or would like help from a local professional. The article was written by Sparkling Marketing, Inc. with information from resources like Zillow, Fortune, and Home Building Institute.