What 2021 Has in Store for the Real Estate Industry

real estate

Investing in a home is a smart financial move. First of all, you don’t have to pay rent anymore. Rent is a pure expense, but what makes it worse is that it’s unstable.

Rent could rise because of many factors. For example, when the market is buzzing and demand is high, your landlord may raise the rent to keep up. He could also increase the fees to help make improvements for the neighborhood. In any case, you’re looking at an unstable expense.

You don’t even get to build value on the rent you’re paying. On the other hand, when you invest in a home, you pay the mortgage. This builds equity over time. The more you play, the more extent of ownership and assets you amass.

Owning a home also gives you free rein in decorating your space. Without terms and conditions imposed by the landlord, you are free to design and renovate your home! The best part about it is that you add value to your property. In fact, this is one of the ways you can increase home equity.

Buying a Home Today

There are many ways you to buy a home today. The best route to take is by getting a mortgage. The trend these days is to consult agents in reliable online real estate brokerage sites. Talking to a professional online has never been this easy, convenient, and safe.

Dealing with a brokerage online is also a better option due to the risks of the current situation. It eliminates any chance of contact and contamination because you don’t have to go outside and expose yourself. Instead, you can simply schedule an online meeting.

A mortgage is also more accessible because you don’t need to shell out the total amount for the property. As long as you maintain a high credit score, you can benefit from faster processing and lower interest rates. On the other hand, paying in cash will tie your money to the house, and you can miss mortgage tax deductions.

Real Estate in the Pandemic

When the pandemic hit in 2020, the real estate market saw a drop in activity during the first quarter. The number of delisted properties soared, and the buyer demand waned. The leading cause was the abrupt economic recession triggered by the pandemic. In addition, there were steep job losses worldwide.

Does this mean that the real estate industry and the market bubble will burst in 2021? Let’s weigh the factors down. One of them is the recession. The recession indeed caused a sharp decline in demand for housing. People are warier about investing because of financial uncertainty. That was especially the case at the beginning of 2020. However, economies worldwide have seen better times ever since.

Couple with agent renting apartment

Fortunately, the real estate market has been slowly recovering, too. Although the prices are still on the rise, there is still the benefit of very low mortgage interest. This means that one of the signs of an impending bubble burst is absent — quickly rising interest rates.

Instead, what’s happening is that governments around the world have decreased interest rates for loans to ease and help facilitate the economic burden caused by the pandemic. In fact, the interest rates have reached a record-breaking low, with trends pointing to keeping them at a minimum until 2023.

Increasing rates make it difficult for homeowners to keep up. The worst-case scenario is that they might have to give up the home. In other words, homeowners might lose their property through a foreclosure or default of payment. Then, it re-enters the market.

A Rapid Rise

Another sign of a real estate bubble burst is yet to be seen — the sudden and rapid sales rise. As we’ve mentioned earlier, the real estate market is still recovering from the drop in sales in 2020. It doesn’t seem to be getting any better.

There’s less economic activity in the industry now, both because of low supply and low demand. The low supply was caused by a sudden delisting of properties over the course of the pandemic. Buyers weren’t so optimistic about investing their money. Indeed, 2020 was a challenging year, and it’s going to take more time to recover from that.

Watch Out for the Signs

There are other signs of a housing bubble that are not present, to name a few:

  • Interest rates for long-term treasuries becoming lower than short-term yields
  • Changes to tax laws
  • Hedge funds and banks investing in high-risk products
  • Increase of housing sales by market speculators who made minor improvements to the properties
  • Vanishing affordable housing

Looking at the facts and how much time has passed, it’s clear that the real estate market will not collapse any time soon in 2021. However, the same cannot be said for the succeeding years, so the industry and potential homeowners need to brace themselves.

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