Last year, real estate investors have seen something unprecedented. Home prices were on a high, while mortgages were on an all-time low. Last June, the median price of homes reached $295,300. It was up by 3.5% from the same period in 2019.
With interest rates falling, more and more people went buying homes. The demand for bigger and spacious homes rose as people were not yet allowed to work at the office or go to school.
As the demand soared, the number of houses for sale couldn’t keep up. Housing inventory was significantly lower compared to 2019.
Now the big question is, how will the real estate industry look like in 2021? Will the same trends continue? Or will it be a different climate altogether?
The roll-out of the vaccines against COVID-19 is a sign that things will soon get better. However, it would be naively optimistic to assume that things can go back to normal this year. Optimists believe that things can start to go back to normal as early as the summer of 2021. However, other experts believe it can be as early as the start of 2022 when you can expect some changes to be felt and seen.
But will things really go back to normal?
One of the changes that the pandemic brought to the real estate industry is how selling is done. While restrictions vary per state, some have allowed in-person showings and walkthrough of homes with a limited number of people in attendance.
However, what made an impact on the industry was the rise of virtual tours and virtual open houses. Real estate agents turned to technology to be able to reach potential customers. It is convenient, safe, and obeys all health restrictions and protocols. It allows potential buyers to explore a home without even setting foot on it. While the technology is nothing new and some realtors were already doing it before, the pandemic had more agents and brokers taking advantage of it. It’s one trend that may remain even after things go back to normal.
Real estate listing apps also made things easier for both seller and buyer. A seller simply uploads photos of his or her home in the app. Prospective buyers can check the app for listings in his or her desired location from wherever they are. These technologies have made things easier for both seller and buyer, so they are most likely to stay even when the pandemic is over.
Mortgages are also expected to rise, though it may not go beyond 4%. The near-zero interest rates are expected to last until 2023. So if you are thinking of expanding your real estate portfolio, you may still do so now. While it is true that there are other factors that you should consider when buying real estate, low mortgage rates can still influence people to buy.
Residential properties still make a good investment.
People will need homes, pandemic or no pandemic. It is an essential need for a comfortable and convenient life. Investing in rentals is a great way to diversify your real estate portfolio. Rentals, whether multi-dwelling or single dwelling, can give you continuous and passive income.
You can invest in suburban houses for sale. You can also check listings for multi-dwelling buildings if you do not want to deal with long vacancies that may be a problem with single-family dwelling units.
Industrial properties also make a promising investment.
With more and more small businesses doing business online, they will need storage and warehouse management for their products. They will need a place where they can safely house their products and one that can make distribution much easier and convenient.
As more and more venture into online retailing, this creates the perfect opportunity to invest in industrial real estate.
Take the opportunity to invest in commercial real estate.
While many investors are shying away from commercial real estate properties due to the mass exodus from big cities, it is actually the best opportunity to invest in one. With the values of commercial real estate properties dropping, you can seize the chance to get a great deal. It is the perfect time to buy a commercial property at a lower price.
If you are paying the mortgage, you may have problems having fewer tenants until the market stabilizes and recovers. This means having less rent to cover your expenses. If you have the cash to buy the property, then you can take advantage of the situation to score a deal with sellers who are in a rush to sell. You can check office spaces, hotels, and retail spaces that are for sale near you.
Investing in real estate is always a good idea. It is a rewarding investment and you can stick with it for the long-term. Despite the health crisis, there are still golden opportunities in the industry that you can take advantage of this year.