What’s Next in 2021 – Part Two
We’re back for Part Two in our series about What’s Next in 2021. I enjoyed sharing with you about interest rates and the work from home phenomenon that took off in 2020. It’s sparked some interesting conversations over the last week and I hope more to come! Would still love to know what you think and how any of these topics affect you personally.
Now I want to dive into three other areas of interest that I learned more about last week. I had the opportunity to listen to Realtor.com’s senior economist, George Ratiu, share his predictions and opinions about 2021, specifically as it relates to the housing market. Below are more nuggets of wisdom I’m borrowing from his webinar with a few of my own opinions and thoughts sprinkled in.
Unless you live under a rock, you probably hear people talking about the problem with housing affordability. It’s even referred to at times as the affordability crisis. I can even pick up conversations about this while I scroll Facebook. Ratiu says a significant headwind to affordability is the supply of new homes. At the start of 2020, he says we had a shortage in the US of about 4 million homes. That problem didn’t get any better throughout the year. When Ratiu started brainstorming about solutions to the affordability problem, he pointed a lot to new development and to issues with zoning. Ratiu says developers could be incentivized to create affordable options and that would certainly help with affordability. However, zoning can create barriers to development as zoning often restricts density and size. I have seen this happen in my area. When developers propose zoning changes to bring in higher-density housing, there is often a lot of pushback from the town regarding that zoning change. I’m not arguing that it’s right or wrong. Simply that I’ve seen this principle in action hyper-locally.
I’m not a millennial. I missed the cutoff. But I’m very interested in millennials and their homebuying habits. Ratiu confirmed what I had heard before, that millennials represent a huge fraction of our population. Millenials are now between 25 and 40 years old, and the largest bracket within that range is the 30-33 year olds. Ratiu points out that the ages 30-33 are a perfect age for home ownership. People used to say millennials weren’t interested in buying…ever. He says that’s just not true. They’ve just delayed milestones in their lives compared to previous generations. Millenials have statistically married later, had kids later, and finished school later. In fact, they are the most educated age group around. Higher student loan debt comes with that, and can be a roadblock to purchasing a home for some. But overall, he said studies show that millennials know how to save money and they have been doing so. They are financially savvy and technology-focused. They are at the age now where they want to buy houses, and big houses at that! They need to work remotely and they’re ready to start a family. So…that tells me as a realtor that my friends in the 30-33 years old age group could very well turn into my clients! I’m here for ya, millennials!
The Rise of the Suburbs – sounds like a Star Wars movie to me. It’s actually a phenomenon where people are being drawn to suburban areas. We can certainly see that here in Charlotte. I moved to Huntersville in 2004 and left there in 2016. That suburb was a drastically different place after twelve years – the growth I witnessed was tremendous! I’ve been in Waxhaw for about four and a half years. Same story in this suburb, tons of new construction and tons and tons of growth. It’s not always well-received, but it’s a fact of life. Eventually cities begin to sprawl into the suburbs, like it or not. Ratiu said in 2008/2009, at the downturn, we thought the suburbs were dead. There was an urban renaissance when all of our millennial friends were moving uptown (and often renting). They wanted to live above a coffee shop and walk to work at a neighboring high-rise. As we already reviewed, those millennials are growing up now and starting families. Throw in the work from home trend, and many people are finding they need more house and more space. And that is the Rise of the Suburbs! He said mixed-used developments are becoming particularly popular around the country. Buyers are drawn to these suburban downtowns, where developers combine retail, residential, commercial space, greens space, all in one. It’s the best of both worlds for a lot of people. Think about places like Baxter Village! Rea Farms! Waverly! Birkdale Village! I see it a lot and I think we’ll keep seeing more and more mixed-used developments here in the Charlotte area.
In conclusion, I was pleased with the picture George Ratiu painted of our economy and the year ahead. Sure, there are a lot of unknowns and things could change in an instant. 2020 taught us that! There is a new strain of the virus popping up, the vaccine rollout is slower than initially planned, and we’re seeing other areas of the world like Europe go back into lockdown. These things could certainly impact our economy. But Ratiu believes our economy is resilient and posed for a strong year in 2021, particularly as it relates to the housing market. This is good news for me. How about you? And Charlotte? Well clearly he had nothing bad to say about our great city. He said our economy here is vibrant and diversified. With a median home price of $370,000, good weather, good economy and a great quality of life, he foresees sustainability of our strong market here in Charlotte. Ratiu says our recipe for success here in the Queen City is working. When he said all that, I was literally beaming at my computer. I felt like a proud parent at a parent-teacher conference. Proud of our city. Happy to be working in such a sought-after area. Delighted to be a homeowner here, too! I’m excited about the future. Buckled in for what may be a wild ride, 2020 certainly was. But encouraged that an economist who knows a whole lot more than I do seems to think it’s going to be a great year. I’ll take it. 2021, let’s do this.
