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Real Estate 2020: Looking Ahead

Written by Posted On Friday, 18 December 2020 00:00
Real Estate 2020: Looking Ahead

In what must be one of the most improbable years on record - a year marked by fear and uncertainty in the midst of the midst of a global pandemic - the real estate industry has prospered. Companies nationwide report year-over-year gains, and activity is unusual for the season.

Many factors have contributed to the nearly year-long house-hunting frenzy: Urban flight. Rock bottom interest rates. Intense competition for inventory - and not least, the remarkable resilience and ingenuity of Realtors who adapted to meet demand. 

But if the robust real estate market has emerged as one of the biggest surprises of 2020, so has the question of sustainability as we look ahead to 2021.

“This has been an incredible year,” said Tim Milam, president, Coldwell Banker Sea Coast Advantage Realty, Wilmington, North Carolina. “We did 7,900 transactions in 2019, and 9,400 in 2020 - and all signs point to continuing activity throughout the holiday season and beyond.”

But there are limits to Milam’s positivity.

“Lawrence Yun, NAR’s chief economist, forecasts a nine percent increase in existing home sales next year,” Milam said. “I don’t know that I’m quite that optimistic. In my region, at least, although we are seeing a continued influx of buyers who are able to work from home, prices here have risen dramatically. If they continue to rise as they have this year, I have some question about sustainability.  I think business will continue to be brisk, but I’m more comfortable with expecting an increase of four or five percent in 2021.”

In Palm Springs, Calif., all but deserted this winter by traditional snowbirds staying home because of the pandemic, long-term rentals have plunged. But the urge to splurge on primary or secondary homes in the desert vacation mecca is keeping Realtors optimistic. 

“There is still such an exodus from the city centers,” said Palm Springs agent and team leader Paul Kaplan, The Paul Kaplan Group. “Even in the face of a coronavirus vaccine, it’s a trend I expect to continue as more Silicon Valley tech workers and people from as far away as New York decide to retire or relocate here, where they can relax and enjoy the desert vibe.”

For one thing, said Kaplan, the work-from-home trend is likely to continue even in the new normal.  

“For another,” he added, “home prices here are more affordable than they are in the city centers. At today’s rates, even people who don’t want to live here full-time are realizing they can afford to buy a second or vacation home.”

In Palm Springs as elsewhere, Kaplan said, the fly in the ointment is the dearth of inventory.

“Home owners here who don’t need to move are just putting in a hot tub or doing some renovating and largely staying put,” he said. “But new construction is picking up, and I fully expect that business will be brisk well into next year.”

Mark Pessin, chief learning officer and designated broker for Realty ONE Group agrees - with reservations.

“We are seeing an incredibly busy December market,” said Pessin, a top producer in the company’s Carlsbad, Calif. office. “We are still at the peak of pandemic demand, and I expect the market to remain strong at least through the first two quarters. As interest rates begin to rise next year, as they surely will, we may ease into a more normal market.”

Realtors will continue to benefit from the technologies they’ve mastered, he said, which will enable and promote virtual home buying - and brokerages will benefit from the money-saving trend toward collaborative work spaces and smaller physical footprint.

“All of this is here to stay,” Pessin said,” and that’s encouraging for the industry. “But how strong buyer demand continues on the other side of this pandemic is what remains to be seen.”

In addition to his strong forecast for 2021, NAR’s Yun believes the Biden presidency could bring impactful changes to the housing market. The homebuyer tax credit Biden proposed as a candidate, for example, would help Americans cover their down payment costs and offers firmer assurance of government guarantees to Fannie Mae and Freddie Mac-backed mortgages, Yun said.

And the truth is, as we close out 2020, most Realtors are too busy working to think about what next year will bring.

“We are grateful to be part of an essential industry that is creating jobs and meeting crucial needs in the midst of these trying times,” said Milam. “Nobody has a crystal ball, but we look forward to the New Year with good reason for confidence.”

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Barbara Pronin

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. She is also the author of three mystery novels and two non-fiction books.

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