New Housing Opportunities in 2021

Housing continues to stay strong and certain trends may become increasingly prevalent

By Sophia Acevedo

Heading into 2021, there is a renewed sense of hope for housing. The last year was a rollercoaster, and returning to some semblance of normal is highly anticipated during this time.

While there are still many variables left unknown due to the looming antagonizing force of COVID-19, economists have a fairly conservative yet still optimistic perspective of what’s to come.

While there are still many variables left unknown due to the looming antagonizing force of COVID-19, economists have a fairly conservative yet still optimistic perspective of what’s to come.

Favorable Demographics Keep Builder Confidence High

Builder confidence reached a new record of 90 last November, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). As Dietz pointed out in our B&D Interview this month, one reason that supports such high builder confidence is favorable demographics.

“We already had some long-run variables that were having a kind of a supporting impact on the housing market, and those would include favorable demographics, in particular, the fact that the edge of the millennials was turning 40 this year,” said Dietz.

Millennials began to make up a sizable amount of home purchases in 2020, and in the coming year, we can expect this trend to continue. According to Realtor.com Chief Economist Danielle Hale, millennials won’t just be looking at the entry-level market but they will also be taking over the “move up” buyer market as they begin to look for more space. Another generation that will be making waves in 2021 is Gen Z, who will also begin to become a part of the first-time homebuyers market, which opens the door for multi-family homes.

“A large number of buyers in the market, including many Gen-Zers looking to buy their first-home and millennials who are both first-time and trade-up buyers, will keep upward pressure on home prices, but rising numbers of home sellers will provide a better relief valve for that pressure,” says Hale in her Housing 2021 Forecast for Realtor.com.

New Administration in the White House

Another variable that will likely have a defining impact on the year will come from the results of the 2020 elections. The Biden Administration will want to create some changes, and one of the areas that they will likely tackle is rental assistance and affordability.

While both federal, state, and city governments have provided some funding for new rental assistance programs, a rental assistance bill is vital for 2021.

Efforts have largely been temporary thus far. For instance, the Centers for Disease Control and Prevention released a natural eviction moratorium that prevented landlords from evicting residents who didn’t pay their rent was only until Dec. 31. Hence, focusing on affordable housing and rent relief in the incoming year can spell a positive outlook for both housing and residents who are looking for economic relief due to COVID-19.

Another area where the Biden Administration will be taking priority is building healthy green buildings and homes. While green building may have taken a bit of a pause in 2020, it should become a much greater priority this year, particularly as wellness and efficiency continue to be in homebuyers’ minds. Furthermore, having a green certification from RESNET, LEED or NGBS can not only ensure homebuyers that their homes were built in an energy-efficient manner but that factors like indoor air quality were considered as well.

COVID-19 Vaccine and Its Impact on Mortgages

By 2021, there is hope that a vaccine-19 will be approved and widely distributed through- out the country, and to a larger extent the world. While this would create an end to the pandemic and largely ease anxiety caused by the virus, its effects on housing is a bit more complex.

While it would improve the overall economy, economists note that it will generally cause mortgage rates to go up higher. According to an article from MarketWatch, Selma Hepp, deputy chief economist at CoreLogic, said while rising mortgage rates could raise some concerns for home-buying activity, it shouldn’t damper the housing market too much as better employment opportunities could allow for more home sales in 2021.

Overall, 2021 will bring progress and much-needed movement in areas like afford- ability, green building, and millennial home- buying. Builders who have who have adapted to new homebuyer preferences are likely to be successful in the incoming year. After all, now that 2020 is behind us we can begin to focus not just on everyday situations but long-term as well. A new year brings a vast sea of opportunities — let’s make the most of it.

Sophia Acevedo is the assistant editor at Builder and Developer Magazine. She can be reached at sophia@builder.media.

Leave a Reply