What’s Next in 2021 – Part One

In the past year, I think a lot of us have murmured under our breath, “What’s next…” as we’ve experienced the uncertainty and volatility of 2020 and now 2021. But in all seriousness, what IS next? I want to know. Don’t you? I want to know what this year will mean for my career in real estate. I want to know how it will impact my clients who are selling and my clients who are looking to purchase. I want to know if interest rates will stay low or if we should anticipate them climbing, and when. I want to know if my husband and others like him will continue to work remotely or if the trend will move back to working in offices. How will our market address affordability of housing and what are some possible solutions to this problem? Millenials – what’s up with millennials? Are they even buying houses and if so, where? What about my beloved suburbs, where I call home. Does everyone love the burbs as much as I do? How has the pandemic affected feelings about the suburbs? And finally, what are some driving factors for future success in our American economy and in particular, our Charlotte market?

Phew. So many questions. Thankfully I don’t have to go research each of these topics individually to provide you with some answers. I listened to a really great webinar earlier this week that featured Q&A with Realtor.com’s senior economist, George Ratiu. This guy is SMART and very well-spoken. He went through each of these areas and shared his opinion in a way that I could understand and found very relatable. I think it’s all very important so I want to recap what I learned from the webinar. These opinions are not my own. Because I took 7 pages of notes, I’m going to turn my summary into a two-part blog series called What’s Next in 2021. I’ll share the things I found most relevant and interesting as I reference my notes from the call.

First up, interest rates! I feel like a broken record some days, talking about how interest rates are so low, making it a really attractive time to buy in terms of financing. Everyone is asking how quickly they need to act to take advantage of these historically low rates. Economist George Ratiu predicts interest rates will remain relatively steady in 2021. There are a lot of factors to watch that could point to a potential increase, possibly midway through the year. The Fed lowered the cost of money this past year to encourage banks to lend in 2020. He does expect this trend to continue for now. Economists are closely watching inflation rates and unemployment rates, both of which impact interest rates. Until unemployment claims go down significantly, he feels that interest rates will remain low. However, we all know that while the interest rates support buying now, the home prices may not. We’ve seen a drastic increase in home prices over the last year. Ratiu attributes this to two main factors, higher building costs and limited supply. Limited supply of homes is probably the biggest driver in rising home prices. That’s another thing I hear myself saying all the time. Inventory is so terribly low, driving home prices up, making it a terrific time to sell! Consumers in today’s housing market have to weigh all sides of the coin, understanding that yes, they will probably enjoy super low interest rates on a purchase. But they may have a really difficult time finding the right house because of our low inventory. They will likely make out like a bandit when they sell, enjoying appreciating home value and having lots of equity to put towards a down payment on their next home. But they must also keep in mind that it’s not just their home value that went up, it’s also the price of their next home. So much to think about and evaluate in today’s market. With that being said, I’m still thrilled to hear Ratiu’s prediction that interest rates will remain steady for much of 2021.

Let’s talk working from home. Who loves working from home, show of hands? I do. My hand is up. But I’ve always worked from home. I don’t have a traditional 8-5 office job and I work in my home office when I’m not with clients. The vast majority of my 8-5 friends and family are all home, and it feels like they will continue to work remotely for the foreseeable future. What does George say about that? He predicts this trend of remote working to continue even post-COVID. He says employers may shift to a hybrid model, with a few days in the office and a few at home. Interestingly enough, he said surveys show that employers have found that their employees are actually working MORE in a remote environment. When you take commuting out of the equation, they have more time to work and are, in fact, using that time wisely. He also said that working remotely is contributing to employees feeling more content. Employers are pleased with productivity in this new environment and employees are generally happier with the savings in time and money from commuting and work-life balance. It certainly sounds like a win-win on paper. Therefore, he predicts work from home lifestyles to continue and to be supported by employers because they will be able to recruit and retain workers more with this setup. What this says to me is that people need home offices now more than ever. As time goes on and the work from home setup seems more permanent, we are seeing a lot of buyers who are looking for houses with one or even two dedicated offices.

So far, the things I’ve shared feel like good news to me. We can hopefully keep our low interest rates for some time into the foreseeable future, and those who enjoy working from home will likely continue to have this flexibility. There are so many things in our world that feel daunting or even like bad news, so it’s truly my pleasure to share a few bright spots. In Part Two of What’s Next in 2021, I’ll cover the other topics that struck a chord with me. Get excited to tackle the subjects of affordability, millennials and the suburbs soon. In the meantime, let’s all collectively smile at some positive news about our economic future in 2021.