Updated: Dec 29, 2020
Disclaimer: I am not a fortune teller. I cannot talk to your deceased loved ones and do not know the winning lottery numbers. If that were the case, I'd be catching a tan on my private island. This is solely based off factual numbers, what we're seeing in our local market and a lil common sense.
I always like to start off any of these blogs by what our industry leaders are telling us in the field and it is a simple story: 2021 indicators are all pointing up. Chief economists from Realtor.com to Redfin are predicting an even stronger year for home sales and pricing to continue to rise. What's the premise? Good ‘ole supply vs demand, coupled with a promising vaccine, growing consumer confidence and some economic relief finally in sight.
What we have seen this year in our Middle TN area*:
Sales in the 2020 pandemic year outpaced the previous year in every housing category for a total of 14%.
On average, the median price for single family homes continued to rise by 9% with a bit of cooling off in pocket areas during these winter months.
Our inventory is down nearly 43% compared to same time last year. (6,200 in November 2020 compared to 10,841 in November of 2019)
All of this in a year where economies were halted and a pandemic raged across our nation. Any increase would have been outstanding but these numbers are truly mind blowing.
What we may see in 2021 and why:
More people entering the housing market: There were several months during and after the initial lockdown where folks just hunkered down and worried about where they could find their next toilet paper roll. The uncertainty kept a lot of people from making a move, both in selling and buying. This will ease as we enter into 2021 with the introduction of a vaccine, an economy on the rebound and stronger consumer confidence.
Low interest rates: they continue at record lows and may even go lower into the new year before slowly trending up toward the last half of the year.
Continued price increasing: low interest rates coupled with lumber shortages and, again, supply vs demand will lend to increased housing prices. Quite possibly not at the pace we have been experiencing but still on the upper end of what would be considered normal growth.
More transplants flock to suburban areas: as “work from home” becomes more standardized throughout industries...buyers will begin looking for homes that better fit their lifestyle and budget in more suburban areas.
Rental market will pick up strength again: once the economy starts to see healthy gains and cities resume the normal activities that attracts residential living, the rental market will come back strong as affordability in housing declines.
Some interesting things to note:
Our builders are having to work with and around shortage of product supply in everything from lumber to faucets. Increased lumber prices are getting passed onto buyers as well as having some buyers modify the type of appliances or finishes of a new home to get it closed. In other words…yes, you picked that fancy double oven and it’s matching appliances but you may have to agree to a monetary credit and be okay with a standard appliance package in order to close your home and move in on time.
Foreclosures. If I had a dime for every time someone told me they’re going to wait until the market tanks in the new year and save a fortune…well, I’d be able to buy a kids meal at Chik-fil-A...but you get the point. Yes, there will always be foreclosures but we’ve not seen an influx of them at this time. It’s mainly to do with the fact that homeowners have a record level of equity in their homes. If need be, they can comfortably sell than foreclose.
The Big Asterisk of it all:
All of this being said…if another lockdown is put into place or we have a much slower rollout of the vaccine than predicted…our future may look very different. And that, my friends, is the lesson of 2020. Whatever guarantees we had in life based on past trends and experiences...can be quickly thrown out the window by a life altering pandemic.
Stay healthy. Stay sane. As always, if you or someone you know is thinking of making a move in 2021…I would love the opportunity to help them navigate this crazy market! Let's talk.
*Data compiled by Greater Nashville Realtors® and represents 9 counties: Cheatham, Davidson, Dickson, Maury, Robertson, Rutherford, Sumner, Williamson and Wilson.
Economist outlooks can be found on Inman.com.