If you’re like most people, you’re glad 2020 is over, and you’re hoping to hit the ground running in 2021.
But are you prepared for the unexpected? The worst-case scenarios? And the potential opportunities?
Check out this compilation of expert opinions and see how 2021 might be very good for real estate agents who play their cards right. (RealTrends)
What Factors Are Driving Real Estate in 2021?
We’ve weathered the 2020 election, and hope for a post-COVID life is emerging. So what factors will influence real estate success in 2021?
COVID-19
Forbearance
Inventory
Interest rates
Preferences
There’s a lot of good news, bad news here. Creating and implementing a plan can get you ahead of the competition and help you help your clients in 2021.
COVID-19
COVID-19 has probably caused more cases of whiplash among real estate agents than bad driving and cell phones. Demand in early 2020 was healthy with the overall U.S. real estate market seeing 10% growth according to MarketWatch. Then the virus hit and caused nine weeks of year-over-year declining sales. Eventually, local boards and governments established safeguards and protocols to facilitate real estate sales, buyers and sellers got more comfortable with contactless transactions, and the recovery began. Many people, however, are still struggling financially.
But what’s next? We have a vaccine rollout, which should be good for the economy and real estate demand. But in many markets, we’re setting records for infections and hospitalizations, triggering stay-at-home orders and fostering further economic uncertainty. Are you prepared for a surge of pent-up demand? Or the possibility of another shutdown?
If real estate is considered an essential service in your area, you can keep working. Contact your prospects and let them know that you’ll continue to operate with all COVID safety protocols in place. If your clients are looking for larger homes, check with potential sellers in the suburbs to up your inventory.
If you’re shut down, top producers recommend that you use this time to enhance your relationship with your client base and market to new prospects:
Target renters and owners in small homes, condominiums, and apartments to let them know which local neighborhoods might offer them more space in an affordable price range, and offer a CMA if they need to sell before they move.
Fine-tune your website and amp your social media game.
Raise your community profile by spearheading a charity drive or arranging a safe virtual socializing event.
Use your time to achieve a new NAR designation such as CRS, e-PRO or a digital marketing certification.
Consider the shutdown an opportunity to make career investments you don’t normally have time to undertake.
Forbearance
This year probably won’t see a return to waves of foreclosures as forbearances expire. That’s because property owners have a lot more equity than they did in 2008, when values cratered and took the economy with them. Owners have the option to sell if they can no longer afford their property. Other borrowers may be offered varying forms of relief including mortgage modifications.
Consider reaching out to inform homeowners currently in forbearance of their 2021 options:
Deferment until they sell or refinance
Payment plans to make up the owed back payments
Mortgage modification
Claim advance
Sell the home "as is" (i.e., without paying to make modifications to the home before selling)
Under most formal plans, homeowners’ credit reports will not be damaged as long as they are performing as agreed. Once the forbearance ends, however, this protection will likely go away. Learn about options for homeowners, market yourself as an advocate and problem solver and pick up a few listings — gold in this time of low inventory and rising prices.
Inventory
The COVID-19 crisis caused many to pull their homes off the market. There were mandated shutdowns. Homeowners decided not to move during the pandemic. Others did not want people touring their homes. And to add to this misery, home construction activity fell sharply in the U.S., pinching off the supply of new homes.
In many markets today, inventory is low and prices are rising as buyers and sellers adjust to transacting real estate during the pandemic. How do you get ahead of the competition when inventory is so low? By preparing a better pitch.
First, make sure all of your buyers are pre-approved for their home loans, not just pre-qualified. Determine which neighborhoods they are interested in and can afford, and then market to homeowners there — communicate that you have a specific interested and pre-approved buyer if they’d consider selling. You can also use targeted ads on Facebook to accomplish the same thing.
Interest Rates
Low mortgage rates are doing their part to keep home prices high. However, as soon as the vaccine becomes widespread, students resume in-person learning, travel and restaurant businesses recover, and manufacturing bounces back, the economy will heat up and rates will likely spike. Some metrics such as oil, Treasury yields, and stock prices are already signaling higher mortgage rates around the corner.
This means your clients should be pre-approved for their mortgages and know the upper limit of their loan approvals. If buyers understand that they can’t afford their mortgage payment if rates exceed, say, 3.5%, that should energize them to buy before rates increase to that point.
Changing Buyer Preferences
The last factor in 2021 real estate is the change in buyer preferences in the wake of the pandemic. Although the newest generation of home buyers had been turning to smaller homes in cities and away from bigger homes in the suburbs, new research from the NAR indicates a complete reversal. Parents working from home discovered they needed distraction-free space to work while their kids played. Backyards became desirable amenities for stir-crazy households. And the desire for more space is pushing today’s buyers to accept longer commutes and pay more for homes.
If this is your new reality, get to know the suburbs, the amenities that can placate former city dwellers, and the features these buyers want — good schools, pet-friendly layouts, a lively restaurant scene, walkability, etc. Map out commutes to spacious neighborhoods from major employers. Become a relocation specialist in your own city.
The pandemic has done plenty of damage but has also created a lot of opportunities for agents who adapt and think on their feet. Worst-case scenarios always come with silver linings, and you’ll gain a competitive advantage by planning for them now.
If you're a Realtor who is exploring new career opportunities, or if you think that West + Main Homes might be a good fit for you, Contact Us or Email Us.
