This year has been an intense one for all industries, but the housing market has managed to come out on top. As 2021 draws nearer, Zillow offers some key trend predictions that could lead to shifts in the market next year.
While COVID-19 has led many homebuyers to search for more space out in the suburbs, Zillow predicts that there will be an increase in demand for city life next year. The potential for COVID-19 vaccine distribution in the near future means that those who may have left more concentrated areas may be returning.
When the economy recovers and more Gen-Zers begin searching for their first homes, “a new class of young adults will be drawn to cities as they finish school and enter the job market,” according to Zillow.
Zillow also anticipates a “perfect storm” of housing market conditions that could lead to a successful spring season for housing. If economic stability grows and mortgage rates begin to rise once again, the residential real estate market could see a “buying frenzy.”
As buyers have utilized more technology in their search for homes this year, Zillow expects this to lead to less traditional seasonality for the housing market. Buyers now have grown accustomed to browsing for homes themselves using online tools, making it easier to buy homes all year round.
Zillow expects that those who are on the search for a new home will continue to use more technological tools in the search process. According to Zillow, about 46% of renters say they wish more listings had virtual tours included. A Zillow survey also shows that about 72% of Zillow Premier Agents anticipate that they will continue using virtual tools even in a post-pandemic world.
Technology was likely one factor that helped home sales to skyrocket in 2020, which shocked the industry. However, Zillow predicts that 2021 might take the housing market even further, with “21.9% annual growth for a total of 6.9 million homes sold,” which could be the largest annual sales growth the market has experienced since 1983.
Although mortgage payments have been more affordable this year due to low mortgage rates, Zillow expects that to shift in 2021. Big housing demand and low supply have led to huge price increases, which have been great for the housing market. However, this could spell trouble for homebuyers and homeowners if price growth continues to flourish and if mortgage rates increase. Zillow predicts “annual home value growth to reach 10.3% in November 2021,” which will likely lead to serious affordability challenges.