We all know that 2020 was a strange, difficult year. Real estate had a strong start. Then the COVID-19 pandemic hit, and everything changed. Just like toilet paper and hand sanitizer, demand for vacation homes and private pools skyrocketed. Despite the sudden changes and challenges of 2020, the real estate market remained strong and the Jarrod Peterson Real Estate Group successfully served 121 clients. Will that carry over into the busy spring real estate market? What about the rest of the year? Read on to learn more about what to expect in 2021.
2021 Market Trends & Expectations
We’re a couple weeks into a new year, but it doesn’t feel like much has changed just yet. And for real estate, we’re expecting more of the same: a very busy real estate market with a limited inventory supply and a high buyer demand. Here are some additional trends to plan for this year.
Seller’s Market Will Continue
We have been here for the past three years and it won’t change in 2021. Low inventory and higher prices will remain the norm. Buyers who understand the process know this means homes will go fast, so they need to be ready to bid quickly and aggressively.
Buying in a seller’s market requires a determined and strategic approach, and the experienced real estate pros at Jarrod Peterson Real Estate Group know how to get it done. We prioritize integrity and client satisfaction at every step. Using our expansive networks as well as knowledge and expertise in the local markets, we guide, support, and protect our clients while working tirelessly to get them into a home they’ll love.
Need for New Construction Will Increase
According to Nicole Friedman of the Wall Street Journal, we need more new homes built, especially in the outer ring suburbs where land is less expensive and more available. However, as John Burns of Johns Burns Real Estate Consulting points out, it’s more complicated than just saying “builders need to build more.” While many national homebuilders bought more land in 2020 than in the past few years combined, getting that land approved, developed, and ready for market takes time.
The COVID-19 pandemic has created opportunity for consumers to move farther out of the city, and you will see the trend continue in 2021. With the limited supply of existing homes on the market, buyers must turn to new construction. One of our real estate consultants, Catherine Reller, says this was already the case last year.
“It was amazing how many buyers wanted to look at new construction,” she said. “The home they were hoping for was not available on the existing market, so we’ve been helping clients find the land to build it on just for them.”
The Jarrod Peterson Real Estate Group helped more new construction buyers in 2020 than any of the previous 15 years. We utilize our extensive knowledge, experience, and professional networks to help clients find the perfect property for their dream home.
Demand in the Suburbs Will Stay High
In recent years, the nation’s 10 largest metro areas have seen higher price appreciation in the suburbs versus urban neighborhoods. According to Ali Wolf, Chief Economist with Meyers Research, Sacramento, San Jose, Boise, Charlotte, and Austin are hot spots for the tech industry and will be very accelerated suburban real estate markets.
Locally, you can expect to see the hot markets continue in Eden Prairie, Woodbury, and Maple Grove, where the Jarrod Peterson Real Estate Group has been named Favorite Realtor thirteen times by consumers and various media publications. Due to affordability, buyer reach will extend farther to areas such as Waconia, the upper Northwest metro like St.Michael/Albertville and Otsego, and Hudson, Wisconsin.
Mortgage Rates Will Remain Low
According to Freddie Mac, mortgage rates hit a new record low the first week of January. And Fannie Mae, the leading financing source for lenders across the country, predicts these rates will continue to be under 3.0 percent on average. Being this low will help offset the higher cost of a purchase price, thus offering more affordability to the home buyers.
Home Prices Will Continue to Rise
The supply and demand equation will continue driving prices. Today, young millennials are buying up property at a record pace. First time homebuyers, who accounted for 31 percent of purchase transactions in 2020, will need to ensure they are qualified and ready to compete for the entry level price.
Those who understand how low today’s interest rates really are realize how much more affordable buying is than renting. Those who have saved money for a home (e.g. down payment and closing costs) are in a much better position to be competitive – which is exactly what the market will be in 2021.
In 2020, the Jarrod Peterson Real Estate group helped clients ranging 19 – 77 years old purchase a home. According to the National Association of Realtors, housing price appreciation nationally is expected to rise 5.7 percent. Locally, we predict a 6.2 percent price appreciation.
Investor Appetite Will Stay Strong
Some investors want rental property, other investors want a “flip” opportunity, and both will be hot. Multifamily housing for apartments and units of 4+ living units moved swiftly in 2020, and they will continue to be strong in 2021.
Another example of investor appetite is the typical family who is purchasing a second home or vacation home. The COVID-19 pandemic fueled the need for recreation space, yards, lakes, rivers, pools, and more. Vacation home sales also increased by 44 percent in 2020 compared to 2019, and we can expect to see that trend continue in 2021.
Private Pools and Lake Frontage Will Be in Demand
As we mentioned above, pools and lakefront properties saw more demand in 2020 than they had in recent years. Kevin Gyllenblad, a leading Realtor in the Brainerd Lakes area for Edina Realty, said the region’s real estate has exploded over the last year.
“Buyers are coming from the Twin Cities in numbers I have never seen in twenty-plus years in the business,” he said. “They want lakefronts and they want recreation space to escape to, and we love helping them find it.”
The Jarrod Peterson Real Estate Group sold a record number of pool homes in 2020, and they sold fast. Our President and CEO, Jarrod Peterson, adds that they weren’t the only hot ticket last year.
“Homes with larger yards were popular with buyers,” he said. “Yardscapes offering more outdoor living were also higher in demand. That was fueled by the pandemic and is a new trend that we expect to continue this year.”
COVID-19 Procedures Will Continue
In 2020, our realtors quickly enacted safety guidelines from the Centers for Disease Control and Prevention (CDC) to ensure the safety of clients and home viewers. Hand sanitizer, protective gloves, safety signage, and more were put into homes, with limited showing windows put in place to help facilitate social distancing and other strategies. Technology also played an important role.
Matterport 3D technology allowed for completely virtual showings and has been crucial to everyone’s safety, satisfaction, and success. By utilizing the latest technology, in 2020 the Jarrod Peterson Real Estate Group sold four homes to buyers who never stepped foot into the home prior to purchase. Some of these practices will phase out as the COVID-19 vaccine is distributed to the greater population, but we can expect them to continue for the majority of 2021.
Last year presented many new challenges for us all. We are proud of our team’s adaptability and determination to continue safely serving our buyers and sellers. We are also tremendously grateful for new clients who trusted us and our services, as well as returning clients we were lucky to work with again who helped make 2020 our strongest year on record.
Be Ready: The Twin Cities Spring Real Estate Market Kicks Off February 14
Traditionally, the busy spring market in the Twin Cities starts the weekend after the Super Bowl, and we expect that to remain constant this year. Once the weather starts hitting 40 degrees, eager buyers come out in full force and they buy property quickly. Sellers who are ready for that demand have an incredible market opportunity.
So, What Are Your Next Steps?
To ensure you are ready for the fast-moving market that begins February 14, you want to get a licensed realtor into your property ASAP. Want to get the most out of your experience? Trust the professional, accredited, and award-winning team at Jarrod Peterson Real Estate Group.
Backed by 35 years of combined experience in the local market, we offer access to invaluable knowledge, professional networks, and marketing expertise to all our clients. Your dedicated Realtor will assess your current price points, discuss and develop a strategy, and help determine any improvements that may create the competitive offering that buyers want to see.
Contact us and get started today!