The housing market has been gaining strength. In November 2020, existing house prices grew by 15% compared to the previous year (pre-COVID). Market trends for 2021 indicate that buyers will face high competition as inventory remains low.
Forget the low start in 2020, since the last two quarters of the year made up for the slow spring season.
Source: Realtor's Real Estate Market Outlook
Trend #1: Fewer and less profitable foreclosure properties: properties with foreclosure filings have gone down 80% from a year ago. And, according to Auction.com, foreclosed properties are selling for 86% of their market value.
States with the highest foreclosure rates were:
Trend #2: Lower interest rates: lack of economic activity caused the Federal Reserve to provide more funding, and interest rates went down. Low mortgage rates increase housing demand from buyers who want to take advantage of those rates.
Trend #3: Exodus to the suburbs: "Even before the pandemic, homebuyers looking for affordability were finding it in areas outside of urban cores. The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown,” said Danielle Hale, chief economist at Realtor.com. For flipping investors, this means that more suburban and rural areas are now desirable areas to venture.
Trend #4: Rental Income Opportunity: due to a combination of trends mentioned above, rents in major tech hubs are declining, but in some markets, rent growth is increasing by double digits.
Source: Realtor.com's January 2021 Rent Report
Trend #5: Mobile or Online Interactions: due to the pandemic, online real estate services became almost 100% virtual - virtual tours, virtual showings, virtual agents, and virtual buyers. As the housing market started to recover in the mid-summer of 2020, house sellers turned to online:
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