2020 Market Recap + 2021 Market Outlook
How many of you have said or heard people say, “I can’t wait for 2021,” or “thank goodness the year is almost over.” While I understand that sentiment, I hope that everyone who’s reading this found joy even amongst the trials of 2020.
I pray this verse resonates with you as we transition into 2021, which very well could be similar in a worldly sense to what we’ve just experienced in 2020.
So, about 2020. Here’s a recap of what went on in the real estate world.
The year started in Orange County with only 3,692 active homes available for buyers to purchase. This was the lowest start to a year since reports on housing began tracking in 2004. Needless to say, it meant the year was going to be a seller’s market once again.
Bam!!! Covid hit. Who saw that coming? Within a week, the real estate market screeched to a halt. Sellers began pulling their homes off the market in droves. Future sellers held off on listing at all, and buyers had virtually nothing to look at, nor could they even tour homes because of showing restrictions in place for open houses and everyday viewings.
Buyers that took a chance during this time were rewarded heavily from March through May as the uncertainty led to price drops, minimal bidding wars, and a sense they were in control for the first time in years. (Two of my buyers timed this correctly, and as I look back, I’m so grateful how it came together for them).
From July onward, interest rates, driven by economic chaos, absolutely lit a fire in the market, and sellers gained control back in a big way. It’s not uncommon to get 10+ offers on a home within 48 hours, and the competition is fierce. Buyers can’t hesitate for even a moment to make an offer, and sellers really can dictate whatever they wish.
And so here we are, heading into 2021 with 2,675 active listings as of Dec 28th (which is unprecedented), historically low-interest rates, a historically high stock market, and a political and economic future that has more question marks than ever before.
So what lies ahead for real estate in 2021?
Everyone wants to know when the bubble will burst. Housing has been historically cyclical forever, and it’s not a matter of if there will be a correction; it’s a matter of when. To sellers who are moving up or down, it’s all going to be relative; so long as interest rates stay low, you will be in good shape. To first-time buyers, you can’t beat the interest rates, and if you can afford the home and payments, then yes, absolutely consider buying. My biggest caution would be ensuring you are satisfied with whatever purchase you make should the market decline, and don’t buy in the hopes of moving up in a year or two, as that very well may not be a possibility if the market adjusts.
Will interest rates rise? While nobody knows at this point, low rates tend to follow economic chaos, and 2020 certainly had its fair share. We should know early in the year how things will unfold politically. With most media and politicians pushing the vaccine to appease the world’s fear, a calmer market outlook may result in slightly higher interest rates. The equation is more fear = lower rates; less fear = higher rates.
Will there be an onslaught of foreclosures bringing down the market? My answer is no. There will be foreclosures when the government allows them. Still, the moratorium is continually being pushed back month by month, and forbearance agreements are doing their job in helping borrowers. With no foreclosures and evictions, the supply will remain low and demand high. Even when they are allowed again, the demand will gobble up any foreclosure supply faster than the market has time to adjust negatively. My guess is by July 2021, we will have a better idea of where we are with supply and demand, and I’ll be able to update this prediction.
So what does 2021 hold for BayBrook Realty?
BayBrook Realty has once again grown this year with the help of the Peter Home Sales Team. Vanessa Gibson, Sarah Tripodo, and Nick Jennings joined the Peter Home Sales Team led by Hilary Peter. I am grateful to have them as part of our group, and excited to see how they will continue to serve the community along with Jason, Sean, Angel and Rachel, Kimberly, and Nicole. My focus will continue to approach real estate from a data-driven perspective. I am keeping a close eye on the supply and demand statistics and where the industry is headed by the way homes are purchased and sold. We will be introducing an ibuying platform to round out our offerings to specific homeowners who desire to sell quickly, with no repairs, clean-up, showings, hassles, and the certainty of a transaction that will close. Think Carvana or Carmax for homes, yet with full transparency of the house’s eventual outcome once renovated and resold, with a financial bonus that you can’t get from anyone else. No longer will homeowners be taken advantage of by wholesalers or the “I buy houses for cash” people, as this has been something I’ve been tracking for a few years and have been passionate about solving.
So to sum it up: If you are considering selling, then this is a great time. From now until June/July 2021, I think you will be in good shape. I’ll revisit the economic housing factors of supply and demand throughout the year to keep you informed. If you are looking to buy, then it’s all about coming up with a strategy to get your offer accepted. There’s no room for error in writing an offer, as it has to be strong and confident from the beginning. Beyond being grateful that you’ve even made it this far in the letter, we are thankful once again to have you in our lives. I’ve said this in the past, and I’ll repeat it. Our goal is to be a group of servants who happen to help people with their real estate needs. Our growth has always been from our reputation and referrals, and we continuously appreciate your kind words and support. Here’s to a New Year.
May we all “Rejoice in hope, be patient in tribulation and be constant in prayer.” Romans 12:12