The year 2020 will go down in history for a myriad of reasons, and very few of them will be good. Seen from nearly any vantage point, the year that was was a troubled one that resulted in property damaged, jobs lost, relationships broken, and lives changed. However, if you were attempting to buy or sell property in the year 2020, you might have a different story as to your personal fortunes. Thanks to record lows in mortgage rates across the country, homes couldn’t stay on the market. Homeowners were reporting as many as 11 to 13 offers on their property after as little as one day on the listings. Truly it was a seller’s market, as this gave property managers and homeowners the leverage to hold out for more money — and more money they received. Bidding wars and cutthroat tactics were employed to ensure that buyers complied with the sellers’ demands. The alternative? Sellers would walk away, and buyers were forced to return to a market that was shrinking every day.
Naturally, despite the somewhat harried nature of the property buying environment, both sides came out on top in their own way. Sellers received more money, (which in many cases gave them the opportunity to close on the bigger, nicer property they were buying for themselves), and buyers locked in on incredible interest rates for their mortgages, some going as low as 2.3% for a 15 year fixed rate.
A Cloudy Future For 2021
According to a Washington Post article, this boom in the housing market last year didn’t mean that everything was trending to a bright, unimpeachable future. If anything, the future is even more ambiguous now that there are so many new property owners and managers in the wild.
- Nearly 2.7 million mortgages (accounting for 5.2% of all mortgages in effect) are in forbearance, totaling nearly $550 billion worth of unpaid principal.
- With November 2020 came the election of a new presidential administration, which could mean changes to interest rates. This would see a somewhat different response to the housing market in 2021.
- One trend that made a marked debut in 2020 however was the increase in millennials entering property management — a trend expected to continue into the new year.
It seems that the other factors of the dismal 2020 year have taken their toll on newly minted, as well as existing, property managers — factors such as the coronavirus’s effect on product fulfillment, and lost jobs. One mistake credit unions and banks are not looking to repeat is the trend of poor mortgage approval that brought the economy to its knees back in 2008, causing a nationwide recession. That history, in conjunction with the unprecedented low-interest rates, has meant that it has been harder for people to qualify for a loan. The current dearth in principal payments speaks to the overall tough year it was for people to make ends meet.
What Can We Rely On In 2021?
While the future may seem hard to predict regarding mortgage fulfillment and interest rates, experts seem to agree on a few predictions.
- There will continue to be relatively few houses on the market in 2021. Just as was the case last year, demand for homes (and apartments) will be high, and supply will be low. According to some estimates, as many as 7 homes in 10 were on the market for less than a month. This isn’t expected to change.
- The price of homes will continue to skyrocket. The previous point makes this point true as well. This is still a seller’s market.
- New housing units are being built in record numbers to meet demand. If your family is unable to get into a house this year, there is still a possibility that you will be able to buy a home that has yet to be built. Apparently, construction contracts are through the roof.
These are only a few of the predictions for 2021, but the ramifications of this continued boom in the housing market could be felt in good ways and bad for many years to come. Aspiring property managers are encouraged to get their affairs in order so as qualify for interest rates while they stay low.