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This year has undoubtedly been one for the books. There has been upheaval in every facet of life, from social unrest to dramatically changed work environments. All of this change is having unexpected and impactful effects on the real estate market.
Real estate investment can take many shapes and forms, including being a landlord, investor, or homeowner.
Regardless of your role, here are six 2021 real estate trends affecting the industry right now.
1. Exodus from the Cities
New York City was one of the hardest-hit metropolises in the early days of the coronavirus. A shocking 30,000 people died from COVID 19 within this densely packed urban landscape.
Almost immediately, people who had the option began leaving the city. With continued confusion and complexity around school re-openings, many are not returning.
Bucolic small towns and beach communities in Hudson Valley, Connecticut, and the Hamptons report masses of families leaving New York City. These families were seeking properties in the country, driving up prices in places like upstate New York, which used to be economically depressed. This mass exodus may or may not last, but it has a strong effect on real estate.
If you were prescient enough to snatch up a cottage in Inverness, CA, or Margaretville, NY, you might be able to sell now at far more than you paid for it.
If you were planning on AirBnbing it, consider that renters are often seeking mid-to-long term rentals right now due to the unknowns around how this pandemic will play our. If you own properties outside of urban areas, you may be able to charge higher rents due to families fleeing the cities.
On the other hand, prices in urban centers are falling. If you do not mind a bit of risk, you may be able to snatch up some awesome properties, which could pay off later. The tax benefits alone could make it worth it in the long run.
2. Working from Home
Another 2021 real estate estate trend has been the migration to working from home. The pandemic sent many office workers home and who knows how long they will stay there? Likewise, many companies have realized that they can cut back on their expensive office lease expenses.
If you have real estate that you intend to either sell or rent, you will want to appeal to the shifting needs of your potential customers. Many folks now need office space, as well as places to escape from their family members during the day.
That means the open plan living area that was so popular a few years ago may now look like a hard place to get stuff done. Consider walling off alcoves or areas that can be working spaces for spouses and kids.
If your place is rural, invest in high-speed wifi so that residents can seamlessly transition to working from home without a glitch.
4. Global Warming
If you have not yet purchased your real estate, many of the events of the past year may now influence your choices more than ever. Locations that once made for beautiful vacation spots may now be more prone to flooding, wildfires, and other after-effects of global warming.
Beach properties throughout the country remain popular, but if you are thinking about the long term, think again. In beach havens like Fire Island, local governments have been reclaiming beachfront property to make way for dunes and other beach erosion prevention plans.
Insurance companies are not only raising rates in some locales, they are refusing to insure some coastal properties at all.
If you’ve been considering investing in a property, you may want to consider the long term risk of owning in areas affected by rising water levels, hurricanes, or wildfires—particularly if you are looking to own for decades.
5. Economic Instability
If you are planning on renting out your real estate, consider the impact of the global recession on your consumer base. Depending on the demographics of your region, you may notice higher than average rates of unemployment. That means that people could have trouble making the rent.
Keep that in mind when you decide how much to charge, how much you can invest, and how much you can afford to lose.
In the wake of the pandemic, the government issued a moratorium so that people who could not work because of COVID-19 could not be evicted. That left some landlords scrambling to pay their mortgages and unable to evict non-paying tenants.
Speaking of mortgages, if you are thinking of investing in real estate now and need a mortgage to do so, understand that it may be more challenging this year. Lenders are more cautious now and need more evidence that you are an acceptable risk.
Keep an eye on your credit rating and improve it by paying down debts. Don’t open any new credit card accounts, but keep the ones you do have open and low. These accounts act as proof that you are reliable about paying back what you owe.
Cash decays every year in value due to inflation, so real property is one of the safest places to park it.
6. Low Inventory
Even before COVID, housing markets were struggling with low inventory. Now the market is even more competitive. If you are thinking of selling, this may be the best time to do so—at least if you don’t have to buy something else immediately.
If you buy a fixer-upper, consider whether you can do the work yourself. With many people adapting their homes into work-from-home environments and multi-generational dwellings (kids moving back or taking care of elderly parents), contractors are in unprecedented demand.
If you can’t do your own repairs or upgrades, then you may have to wait months to get the work done.
The Key Real Estate Trends of 2021
Between the uncertainty of the pandemic, economic instability, and a wide-spread shortage of residential housing, lifestyles are changing rapidly. For anyone seeking a lucrative future in real estate, there are opportunities available, but you’d better pay close attention to the key real estate trends of 2021.