Real estate and affordable housing has witnessed tremendous change within the past year and the crisis vary from one country to the other. As we reported in a recent post, Vancouver was ranked the second least affordable city to live in, with Hong-Kong ranked as first. Sydney, Australia, Auckland, New Zealand, and Toronto rounded out the top five spots. Montreal and Ottawa-Gatineau didn’t make the top 20 but each deteriorated to being considered severely unaffordable. The international report also warned that housing affordability is worsening.
The most commonly used indicator in the US and many other countries is the ratio of house prices to incomes or earnings. A higher ratio indicates relatively more affordability. A ratio of 100 indicates that median-family income is just sufficient to purchase the median-priced home. Ratios above 100 indicate that the typical household has more income than necessary to purchase the typical house.
In some countries, the seller’s market is currently stronger than ever due to low home inventory. So this seems like a pretty good time for sellers. Meanwhile, if you are a buyer in 2021, you’ll have to be on top of your game due to the extreme competition from other homebuyers. We collated reports from few industry experts on what real estate buyers and sellers should expect in 2021.
2020 accelerated some foreseen and unforeseen trends globally, without leaving sparing the housing and real estate market. The housing market experienced so many changes within the past year, including some that have never been seen before.
According to Associate broker Vincent Cyr of the Cyr Team at Keller Williams said, “There has never been a better seller’s market in history. For those who wish to sell high and have more tolerance and acceptance from buyers for less-than-perfect homes, 2021 is the year to make it happen. As interest rates climb, pricing power will decrease. If you thought about selling in the next year or two, accelerate those plans!”
Reports have revealed that thirty-year mortgage rates hit historic lows at 2.65% the week ending Jan. 7, 2021, falling approximately one percentage point from a year earlier, when the 30-year rate was 3.64%. The 30-year rate had risen to 2.97% but still remained near historic lows. For perspective, over two years earlier, in November 2018, the 30-year mortgage rate was close to two percentage points higher at 4.94%.
Bill Samuel, a residential real estate developer and owner of Blue Ladder Development, offered this insight on how you can benefit from the current housing market. “If you are priced correctly, expect buyers to go above and beyond the typical expectations to purchase your property. Many buyers are overbidding the asking price, waiving inspection contingencies, expediting the closing and doing anything else they can to not lose out on a property.”
“Expect a very competitive market with multiple offers on most of the properties you are interested in at least for the next several months. If the current supply and demand of the market continue for the rest of the year, then expect this year to be even more competitive than last year,” he added.
Associate broker Cyr echoes Samuel’s sentiments and offers insight on pricing on existing homes and new construction.
“We expect continued low levels of inventory, competitive bidding on properties and increased home prices. New construction will also see increased prices due to lumber price increases and shortage of labor. We see interest rates remaining low but inching higher as the economy improves. This will increase the Buyer’s FOMO.”
Vander Stelt also believes that the quarantines in effect in many states have caused homeowners to take a new interest in their current living spaces, which means many won’t be motivated to sell. “Secondly, the home hardware and improvements sector had a fantastic 2020. There was nothing else to do but stay home and work on your home. Less homes will be put on the market in 2021 because so many homeowners improved their nest in 2020 with better maintenance, updates or adding a new feature like a deck, pool or three-season room.”
“People working in real estate should already be comfortable with the fact that virtual home tours and remote closings will be here to stay even when the threat of this pandemic has gone away. The convenience that this gives to both sellers and buyers is something that the real estate industry will continue to promote and take advantage of. The benefits of this kind of arrangement are far more than just avoiding physical contact in the fear of contracting the virus, which is why they are here to stay.”