2020 has been a remarkable year for many reasons. It seems that there is no part of the economy that COVID-19 has not affected in some way. This is certainly true of the real estate market, which has seen wild fluctuations that are largely unprecedented.
The question, though, is whether these unusual market conditions will continue into 2021 to the point that it will make it even more worthwhile to sell your home. While no one has a crystal ball to see the future of the real estate market, here are some potential pros and cons of selling your home in 2021.
Interest Rates
To help stimulate the economy, the Federal Government has kept the benchmark interest rate at historical lows, around 0.25%. This, in turn, has led to record-low mortgage interest rates, fueling buying across a variety of home types and prices.
At some point, the Central Bank will likely raise the benchmark interest rate, especially if COVID-19 is brought under control. This could mean that selling in 2021 will be more difficult since fewer buyers will be motivated by the interest rates. The good news, though, is that for the first part of 2021, at least, interest rates are likely to remain low as most places will still be dealing with COVID-19.
This, in conjunction with an improving economy, could make 2021 even more lucrative for sellers. As long as you pay close attention to the economic situation, 2021 could be a great year to sell your home.
Selling Complications
Selling a home in 2020 has been complicated by the fact that you need to keep potential buyers safe from COVID-19 and ensure that your home is sanitized after buyer tours to protect your family, as well. As difficult as this process can be, it has resulted in thinning the ranks of buyers who are just “kicking the tires.” In other words, for a buyer to come to tour your home, they have to be really serious about buying. This leads to faster turnaround times and the potential for a higher selling price.
If the virus is brought under control in 2021, you will likely have to take far fewer precautions when presenting your home to potential buyers. This will make the entire selling process far easier. The downside, of course, is that buyers won’t need to be as focused when they’re searching for homes, meaning that you could get a lot of casual interest that could draw out the selling process.
Increased Wealth
With the economy already showing signs of life, it is likely that more people will enjoy increased wealth in 2021. As companies come back to life, they will need to hire broadly, presenting significant opportunities for anyone willing to put in a hard day’s work. Of course, with increased wealth for more people comes the possibility that interest rates will rise to keep the economy stable.
Given the Central Bank’s cautious approach to raising interest rates, though, it’s unlikely that interest rates will rise quickly. It’s far more likely that increasingly wealthy buyers will improve the chances of a bidding war that will result in more money in your pocket.
Housing Inventory
Since there are so many contractors required to build a home, 2020 has seen a dramatic downturn in the building of new homes. This has exacerbated the housing shortage, which was accelerated as COVID-wary buyers sought refuge in a home of their own. Of course, if you were a seller in 2020, this was nothing but good news for you since your home value shot up higher than you probably thought you’d ever see.
In 2021, with a lot of backlogged projects on the table, there is likely to be a housing boom that will see a sudden increase in the number of available homes. This could cause a sudden decrease in home values for owners of existing homes, making 2021 a less-than-ideal year to sell. Of course, with only limited numbers of construction workers available, it could take a while for this phenomenon to occur.
Lack of Elections
For the most part, 2021 will be an exceptionally quiet year on the political front. Although it remains to be seen how new policies will affect home prices, there will ultimately be smooth sailing in terms of political transitions. Given the upheaval that occurs in any presidential election year, the relative smoothness of 2021 will be a welcome sight for many potential homebuyers. This could lead to more buyers entering the market to the point that home values rise even further. Thus, while 2020 has been a great year for sellers, 2021 looks to be pretty fantastic, as well.