First, a quick look back on 2020
Before we look ahead to the coming year, let's take a quick look at what happened in the real estate market in 2020! At this time last year, economists were predicting interest rates to remain low (they dropped even lower) and bidding wars to make a comeback (and wow, were they right).
Driven by historically low interest rates and new priorities for comfort and space at home, buyer demand quickly rebounded after initial Covid-19 lockdowns but sellers weren't so quick to upend themselves (or invite people into their homes). Those sellers that were able to list their homes were the clear winners in 2020 as persistently low inventory could not keep up with demand. This led to some of the wildest bidding wars our market has seen in decades - maybe ever. And prices followed.
Our regions saw an increase in median sale price with the Eastside up 10% and Seattle up 6% over 2019. 60% of all Seattle listings and 62% of all Eastside homes went under contract in the first 10 days on the market and at an average 104% of their listed price (in both Seattle and the Eastside).
Each year Windermere produces a report that includes a complete overview of how our local markets performed. To view the full report, click on your area of interest below:
SEATTLE | EASTSIDE | MERCER ISLAND | CONDOS | WATERFRONT
Where's the market headed in 2021?
Below, we'll take a look at economists' predictions for the housing market this year. Here are a few common threads:
The housing market will remain strong in 2021 and home sales (by volume) are expected to surpass 2020.
Inventory is expected to improve in 2021 as vaccinations allow more sellers to list their homes and more new construction is completed.
Prices will continue to rise in 2021, though at a more moderate rate (less than 5%) compared to 2020.
Interest rates will rise slightly but remain low in 2021 (3.0-3.5% for 30-year fixed mortgage).
More Americans will move to suburbs and smaller, more affordable cities as home priorities change and more employees are allowed to work remotely.
We've included 2021 predictions below from Windermere, Zillow and Redfin, all of whom provide thoughtful, data-driven analysis.
WINDERMERE:
Assuming eventual improvements in Covid-19 cases and vaccinations, interest rates will climb slightly in 2021 and 2022 but are unlikely to surpass 3.5%.
Home sales (by volume) are likely to increase 6.9% over 2020. A level not seen since 2006.
Expect a big jump in new home building (as much as +16.4%). Financing is cheap, demand is growing in areas where it's easier/cheaper to build, and competition for labor and materials is reduced thanks to a decrease in commercial construction.
Prices for urban condos may soften as buyers feel less of a draw toward city centers.
ZILLOW:
Expect 2021 to be even stronger than 2020. Buyer demand remains high and a surge is expected in cities as economies reopen. Home prices, mortgage rates and rents are likely to rise.
City living will almost certainly enjoy a renaissance in 2021.
Consumer demand will make a digital-first experience the new standard for real estate in 2021 and beyond. Most agents will continue to offer 3D walkthroughs and virtual tools even after Covid-19 is less of a concern.
This Spring's home shopping season could likely be the hottest in recent memory and, after that, 2021 may signal an end to the typical seasonal slow down in Winter.
REDFIN:
More Americans will move out of town thanks to the growing prevalence of remote work. Expect a 25% increase in out-of-town-movers (from 2018, when 11.4 million moved across county lines). As a result, cities like Buffalo, Cleveland, and Pittsburgh are likely to see improved economies and a potential influx of employers/satellite offices.
Home ownership will rise above 69% (for the first time since 2005) as renters who can work remotely leave the city for more affordable suburban homes and urban condo prices decline for remaining city dwellers.
Expensive cities are NOT going to die off as residents move away but cities may need to invest in culture and lifestyle to attract residents and tourists.
45% of surveyed homebuyers in the Spring of 2020 reported offering to buy a home sight unseen. Data points to an increase of this trend moving forward.
What does 2021 hold for you?
If you're considering a move this year, let's start the conversation now! It's never too early to start planning, whether you're interested in a move, an investment purchase, or even a remodel.
I'd love to share my experience and help guide you to the right folks to assist you at every stage of the process. Let me know how I can support you wherever you're headed!
Best,
Chad