Real Estate Investing in 2021

2020 has been quite a year in just about every respect imaginable. Beginning in March of last year, we saw just about every “norm” in life turned completely on its ear because of the worldwide COVID-19 pandemic. That’s why it should be no surprise that the world of real estate investment also underwent a wide array of changes during the past year. 

As an interment firm, we are all about making sure that our investors are fully aware of what we’re thinking and how we’re approaching things. We make it our business to watch out for trends so we are able to make wise decisions.

Please read below for ten of the developments that Gatsby Investment think are going to occur in 2021.

As the pandemic spread across the world, everything moved inward. People were no longer going to work in offices, they were no longer eating out and they were no longer working out in large groups. That also meant that people had to be careful about staying within their proverbial “bubbles” to avoid possible transmission of the virus, and that definitely affected how people bought and sold homes. Real estate in 2021 will continue to move evermore towards a reliance on technology to show homes, to obtain offers and to handle all of the paperwork necessary to complete a sale. Virtual tours and such will continue to dominate the way that things are done in this regard.

One of the major concerns regarding the pandemic is the loss of jobs, the closing of restaurants and retail outlets and several other factors that can and likely will have a negative effect on the overall economy. Historically, when our economy has teetered on the brink of a downturn, the Fed has responded by lowering interest rates. Given that interest rates are already at historic lows, it’s probably not that likely that they will go any lower. However, it does seem likely that they will remain extremely low, which will be a boost to how people handle real estate in 2021. If money is not expensive to borrow, it’s more likely that people will borrow it.

It seems like just yesterday that Millennials were the “new thing” with regards to how we looked at generations. They are enormous in number and to date, they have not really penetrated the homebuying market despite the fact that there are more than 70 million Americans who belong to this generation. Real estate in 2021 may see that change. A lot of experts thought that would happen this year, but as we know a lot of other things unfolded that hampered their ability to get out and start buying property.

For years, there were fair housing and community reinvestment programs that helped with the overall residential market in terms of people buying homes in areas where home ownership had never been very high in terms of percentage. During the previous four years, those policies were rolled back, and it had a deleterious effect on those areas. Real estate in 2021 could involve a reinstalling of those policies, or at least some form thereof. That would once again invigorate those local markets and provide an overall boost to the residential real estate market, and that would be welcome for several obvious reasons.

To date, we have seen quite a bit of damage done to the jobs market as a result of COVID-19. Millions of people have lost their jobs, although there was an uptick in this regard towards the second half of 2020. Predictions regarding the jobs market are all over the place as they relate to the next year, but one thing is certain: Real estate in 2021 will depend largely on employment rates. If the proverbial bottom falls out and millions more lose their jobs, that will clearly impact the market in a negative way.

With a new presidential administration and a new congress often comes new policies or at least new approaches to existing policies. How will this affect real estate in 2021? If the newly constituted federal government, either in response to or in getting ahead of the employment factor noted above, puts together additional stimulus packages, that could have a direct effect on the number of homes that are bought and sold.

One trend that’s already developing – and that started at least to some extent before the pandemic – was that people were beginning to move away from states with higher income and property taxes in place, such as California and New York, and into other parts of the country where those costs are not generally as high. These locations include places like Florida and Texas, among others. Real estate in 2021 could see more people leaving these places for others as remote working becomes more of a norm instead of a response, thereby creating more inventory for buyers in those locations and a seller’s market in the destination markets.

One thing everyone had in common in 2020 was that we all got to spend a lot more time at home. That led many of us to start thinking about how much time we’ll spend in our homes in the future, which in turn led people to believe that not only will their family lives, but also their schooling and working lives, could be spent there for the foreseeable future. That could be why home sales rose sharply towards the end of 2020, and that trend could continue with regards to real estate in 2021. That would lead to higher prices that come with higher demand.

Following on the previous point, the workplace in the United States as it’s traditionally been thought of changed radically over the past year. According to an article published by Stanford University, an eye-popping 42 percent of the American workforce now primarily works from home, and several surveys have indicated that companies are inclined to keep it that way for many reasons including lower overhead costs and higher levels of productivity. That has also led people to look for larger homes with dedicated workspaces as opposed to just getting through a few months in the living room during the day.

Finally, given the amount of movement between states and the number of people now working from home, real estate in 2021 could see a rise in the amount of inventory that’s available in different markets around the country. That will obviously create more buying opportunities for people, but it remains to be seen how that will coincide with the already-high demand that exists. Where that inventory comes free will also be quite relevant, but homes are the new offices and in some places the new schools, and that could lead to quite a bit of movement assuming the economy turns somewhat upward in the next year.

Overall, real estate in 2021 is going to be an interesting market to watch. In previous years, things were largely predictable as markets moved upward and then predictably downward in a traditional cycle. 

Given all of this unpredictability and ever-changing circumstances, it may not seem like a great time to get into real estate investing. We don’t believe that’s the case. Real estate is generally a more stable and predictable mode of investment than stocks or bonds. 

Gatsby Investment produce a return on investments that’s very difficult to match in the marketplace. If you’d like to learn more about what we do and how you can benefit from our real estate investing experience, please contact us today.