The resilience of the real estate market is the surprise that this year has brought to the industry. The pandemic shift to working from home has provided flexibility to live in a place never before considered. And the demand grows as real estate sales were up 20% over year according to the National Association of Realtors. On a company’s earnings call with analysts, Zillow CEO Rich Barton said this is the beginning of “The Great Reshuffling.”
A Huge Surprise
In February millions of jobs were either lost or put on hold, this weakened the economy big time. None of this stopped house hunters from flocking to online platforms to dream, to browse and to eventually purchase their first home. As the pandemic drove people deeper into their homes and families spent more time around the hearth, people realized the importance of their home. This prompted browsing for more suburban spacious properties, with new digital viewing experiences enhanced greatly. This new transformation of the real estate industry will definitely move to implement considerable opportunities to the new generation of buyers.
The past months have seen a steady climb and expectations are that some markets might peak and then level off. So exactly what will the new real estate environment look like in the near future? Zillow projects home sales are “expected to peak this fall then taper off through 2021, though still staying above the pre-pandemic levels.”
It’s a Hot Sellers’ Market
We’re reaching record high sales predictions into 2021 with inventory falling but signs point to conditions balancing. The demands have somewhat softened as supply jumped. Data continues to prove prices and sales are surging month-over-month breaking new records and projections are that certain markets will enjoy even higher sales next year.
A dramatic shift in showing homes were 3D home tours, used to recreate your home with a 3D model experience. This technology was used by few listing agents prior to the pandemic, but skyrocketed in the past months lending enormous possibilities to out of state buyers that chose to dream some more. In 2020, both buyers and sellers quickly adjusted to lower interest rates as home price appreciation in metro Denver went up 3.5%. Ongoing economic expansion will encourage wage and employment growth and strongly support the residential market in the year ahead.
Commercial Real Estate Updates
This brings us to the office and industrial commercial real estate markets. Another surprise is the fact of low vacancy rates and rising lease rates that have been reported. Denver’s retail market has posted weaker conditions with a slight direct vacancy increase. Beyond 2020 the retail outlook remains cautious and markets continue to adjust, while coping with quickly changing shopping preferences. As the lack of homes for sale increase, rental demand should recover somewhat, alongside the economy.
Resilience of The Market
“The housing market continues to be a bright spot for the economy, supported by increased buyer interest in the suburbs, exurbs and small towns,” said NAHB Chief Economist Robert Dietz. Home buying and selling prospects drastically improved in October 2020 with unusually high buyer interest this late in the homebuying season. This comes as buyers are moving much faster than this time last year, hoping to lock in low mortgage rates.
The longer the pandemic continues, more of a gap might form between those who can afford a home and those whose prospect of homeownership will become less attainable. “If it weren’t for a pandemic and potential economic calamity, we could really get excited,” Barton, Zillow’s chief executive, said on the company’s last earnings call.