If you go back and read the Outlook we wrote in January 2020, you won't find any predictions regarding global pandemics, historically low-interest rates, or political tumult. At Norhill, we have no crystal ball and can't tell you exactly what will happen with the housing market in 2021. But you know what? We're going to take a stab at it anyway. It's January, and after 13 years in business, we've learned a thing or two about Houston real estate.
Real estate was one of the big winners of 2020 and Houston's market was no exception. In fact, it boomed! According to the Houston Association of Realtor's year of end report, a record 96,151 single-family homes had sold across greater Houston in 2020. That represents an increase of 10.5 percent from the previous record of 86,996 in 2019. On a year-to-date basis, the average price rose 5.9 percent to $324,069 while the median price increased 6.1 percent to $260,000.
Real estate times were good. They were good for homebuyers because they were able to lock-in historically low-interest rates for the long term, and they were good for sellers who were able to take cash in on higher home prices and quicker sales.
Next year, Houston is expected to continue to grow. According to Zillow's Q4 2020 Home Price Expectations Survey, real-estate experts, economists, and investment strategists say Houston will outperform the national housing market in the coming months. Houston ranked 12th overall, with 32 percent of experts saying Houston will outperform the national average.At Norhill, we agree. We expect Houston to continue to grow in 2021 and here’s a peek at what we think the biggest trends will be for real estate in 2021.
THE ENERGY INDUSTRY WILL CONTINUE TO BOUNCE BACK
Houston's real estate market grew in spite of troubles in the energy sector, not because of its growth. This usually isn't the case in Houston. Even though our economy has become very diverse in the few decades, energy is still a vital part of it. They don't call us the Energy Capital of the World for nothin'.
In March, oil prices hit their lowest level in 17 years as demand plunged in the early days of the pandemic. Thankfully, they have rebounded considerably to over $50 a barrel. A much more comfortable price point for the local industry and the Houstonians who work in these sectors. This rebound in the energy sector is expected to continue as global Travel begins to rebound. This dynamic should help provide more confidence to aspiring homeowners who work in the industry and help boost demand in 2021.
HOME PRICES WILL CONTINUE TO INCREASE
One of the biggest characteristics of Houston's 2020 housing market was a shortage in inventory. According to HAR, inventory by year’s end was down to its lowest level in history – a 1.9-months supply. Sellers have obviously returned to the market at a slower rate than buyers. With fewer houses to choose from, prices increased. While we won’t see the same skyrocketing prices we saw in 2020, home prices should increase, just at a slower rate. More sellers, like the ones discussed above, will return to the market, which will provide continued demand.
HOME SALES MAY SLOW
Record-low interest rates encouraged buyers to flood the market to take advantage of the savings. As stated above, year-over-year home sales increased 10.5 percent in 2020. That's a big jump. Thanks to historically low-interest rates, some homebuyers decided to move up their home buying to 2020 instead of 2021. This dynamic may help moderate demand this year, even as new homebuyers enter the market thanks to the end of pandemic good feeling everyone is looking forward to.MORTGAGE RATES WILL REMAIN LOW Mortgage rates hit all-time lows in 2021. Falling as low as 2.67 percent as recently as December. they hit a recent peak of 4.94%. These eye popping rates were a big reason for the boom we saw last year. In a recent forecast, the Mortgage Bankers Association (MBA) predicted that home loan interest rates would average 3% or below for the coming months. Most industry experts believe rates will slowly edge up throughout the year. This anticipated increase will more than likely continue to bring new home buyers into the market sooner rather than later.
WORKING FROM HOME WILL CONTINUE TO SHAPE TRENDS
In 2020, a large number of homebuyers wanted to purchase a property that would be conducive to working from home. While it’s expected that workers will begin returning to the office in 2021, working from home will still factor into trends. More workers will likely have the flexibility to work from home as needed, and buyers will be looking for home offices, good Internet connections, and outdoor spaces that can be used for working. Proximity to other spaces that facilitate working remotely, such as coffee shops, cafes, and parks, will also be important.WE’RE HERE TO GUIDE YOU While citywide real estate numbers can provide a “big picture” outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our area and the issues most likely to impact sales and home values in your particular neighborhood. If you’re considering buying or selling a home in 2021, contact us now to schedule a free consultation. We’ll work with you to develop an action plan to meet your real estate goals this year. Fill out the form below to get matched with an agent to learn more about the home buying and home selling process.