The Covid-19 pandemic disrupted people lives across the board in 2020, from social interactions to finances. But a return to normalcy could be on the horizon, thanks to a vaccine. There are many reasons to be excited about the prospect of a Covid-19 vaccine becoming readily available — better health and well-being for everyone, a return to dining out, vacations, meeting with friends and colleagues, and economic shifts. If you are looking to buy or sell a home in 2021 you might be wondering about the Covid-19 vaccine and real estate. The experts at home light are up-to-date on how the Covid-19 vaccine will affect the housing market, sharing data culled from more than 1,000 top agents from across the United States in its Q4 2019 survey. Here are some of the shifts that we might expect from real estate as we move full speed ahead into 2021.
More sellers on the market
In 2020, many would-be sellers were hesitant to list their homes due to social distancing rules, and safety concerns. Agents responded to this by implementing virtual showings, and limited in-person showings for serious buyers, with strict safety protocols. The survey found that buyers are feeling more at ease about seeing homes in person now that a vaccine is available, while sellers are still hesitant. One Detroit based agent in the survey, shared: “Some of my sellers have decided to wait until 2021 to list. They are afraid they can’t find another home, and they don’t want strangers going through their home because of Covid.”
Overall, 50 percent of agents said that a widely distributed vaccine would cause a shift away from a seller’s market where there is not enough supply to keep up with demand. Buyers may want to wait and see how the market shifts, but agents also said that the inventory may be in flux for a while. Agents also noted that as businesses reopen and the economy picks up overall, due to the vaccine, buyers and sellers alike may be more open to moving forward with their real estate goals.
Mortgage rates in flux
One positive result of the Covid-19 pandemic came for buyers, with mortgage rates at an all time low, and as vaccinations become prevalent, more people are expected to take advantage of this option to make moves on plans that may have otherwise been put on hold to upgrade or even downsize. Low rates were one of the major factors leading to a seller’s market, and in Q4 2020, more than 95 percent of agents said that low mortgage interest rates were boosting buyer demand in their markets, up from 70 percent in Q4 2019. In fact, mortgage rates dropped consistently throughout 2020, hitting a new record low of 2.67 percent during the week of December 17 for an average 30-year fixed rate.
In response to rock bottom rates, new sellers entered the market: 68 percent of agents said renters were opting to buy, 66 percent said current homeowners were ready to upgrade, and 46 percent said older adults were making the decision to downsize. Moreover, 40 percent of agents said that parents were seeing an opportunity to help adult children buy their first homes. However, according to the survey, 34 percent of agents expected mortgage rates to rise as people receive the vaccine and the economy improves. This increase in rates could start to soften the seller’s market, however, mortgage trends (much like the distribution of a vaccine), won’t be immediate — Fannie Mae predicts the 30-year-fixed will sit at 2.8 percent until the end of 2021, while the Mortgage Bankers Association expects it to hit 3.3 percent.
The price is right, maybe
Winter is typically a real estate off-season when bargains can be had, but 2021 is an anomaly with the current seller’s market and nearly three-quarters of agents in Q4 said home prices are on the rise in their markets. Prices are expected to keep rising in 2021 as a vaccine slowly rolls out across the country and that means homes could be selling fast: nearly half of agents said that bidding wars were hot, and nearly 80 percent said that homes in 2021 would sell at the same pace or quicker than they did in 2020.
Remote work spurring moves, for now
With shelter in place ordinances, workers across the country traded their cubicles for the kitchen table or homes offices, or even, opted to move to vacation homes for a more pleasant work-life balance. But what’s going to happen when people become vaccinated and there is a potential return to the office? More than 14 percent of agents said this shift will impact real estate, as people head back to a somewhat normal working life. Many employers are also still waiting to see whether they will stay permanently remote or go back to the office, so it’s unclear whether people will continue to make moves or stay where they are. Nearly 20 percent of agents in the Pacific Coast region pointed to this trend, followed by more than 16 percent of agents in the Northeast.
Ready for anything
Tips from top agents show that the best scenario is to be ready for anything. The move to virtual showings, digital closing tools, and at a distance appraisals, means that agents are prepared to sell homes, no matter how the market changes, or how long shelter in place rules are mandated. The U.S. may not yet have a handle on Covid-19, but the 2021 market is ready, and a vaccine will help keep it going in a positive direction.
The year 2020 was a reminder to expect the unexpected, but also that major societal shifts can’t happen overnight. Having a readily available vaccine will gradually change the real estate market, as with every other aspect of our lives, and depending on your plans for your next home, you may want to act now, or see how the market responds.