The last few years have been a time of turmoil and transformation. Seeking a sense of stability, many people have turned their attention to achieving the dream of homeownership. If you’re one of those people, here’s what you should know about purchase a home or the real estate market of 2021.
The Aftershocks of Covid-19 Are Still Being Felt
For the last two years, the Covid-19 pandemic has led to sweeping changes throughout every aspect of our lives. That’s as true for the real estate market as it is for anything. As a result, knowing what to expect when following the steps to buy a house is more complicated than ever.
Quarantine orders and an explosion in work-from-home jobs saw an increase in demand from home-buyers (see below) while also impacting the kind of properties being sought, with greater emphasis on spacious quarters and on-site offices. How long this increased demand will last is up for debate, now that widespread vaccination has led to a loosening of restrictions.
Add to that a significant generational shift, as both Millennials and Gen-Z twentysomethings begin playing a major role in the market, and it’s clear that 2021 is a major transitional period. The full implications of this when it comes to real estate remain unknown.
A Boom in Buyers Means Prices Are on the Rise
As noted above, the necessity of people spending more time at home due to Covid-19 has resulted in a dramatic increase in demand for real estate. Most notable within this increase is a boom in the number of first-time homeowners who are interested to purchase a home. The increased demand, however, has not been matched by the supply.
Simply put, there are more buyers in today’s real estate market than there are available properties. According to the most recent Confidence Index Survey by the National Association of Realtors, houses currently spend no more than 17 days on the market before selling. In that time, most properties receive between four and five offers from interested buyers, with cash sales up 23% from 2020.
So much competition over such a small pool of available properties means that real estate prices are on the rise, especially in suburban and rural areas. For those looking to buy a home in 2021, decisive action is increasingly indispensable.
New Grants & Tax Credits May Be Available Soon
The one-two punch of rising prices and intense competition may be intimidating for prospective buyers right now, relief might be on the way. The election of President Joe Biden may end up having just as transformative an effect on the real estate market as the Covid-19 pandemic has had.
Indeed, one of President Biden’s campaign promises was offering a tax credit of $15,000 to first-time buyers. Two bills have been proposed to fulfill that promise: the First-Time Homebuyer Act and the Down Payment Toward Equity Act of 2021. If approved, the former would provide the promised $15,000 tax credit, while the latter would swap out the credit for a $25,000 grant.
If either of these bills are approved, it could help lower the bar to entry for first-time buyers for whom the prospect of saving for a large down payment is notably more daunting than that of making smaller mortgage payments over the course of several years to purchase a home.
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