Robert Backer: Real Estate In 2021
Monday, January 4, 2021 - by Robert Backer, president, Greater Chattanooga Realtors
Last year taught us many lessons, both good and bad, but one thing I’m still amazed by is how quickly everything changed when COVID struck. Seemingly overnight, our whole way of life changed. As I take the reins from 2020 President Brandi Pearl Thompson, I am thankful for her leadership in an unpredictable and unprecedented year.
Witnessing that sort of change is humbling, especially when trying to project where anything might be in 2021, let alone something as specific as real estate.
As Brandi Pearl Thompson can attest, predictions aren’t always accurate, but some indicators can show us the general direction that markets are trending. I’m thrilled that local real estate has bounced back so robustly. Real estate was deemed an essential service, and Realtors like me worked to the best of our ability to ensure the safety of our clients and community.
As for real estate trends around the nation, I look at some recent studies from leading housing experts, including Chief Economist at the National Association of Realtors, Lawrence Yun, who gave his 2021 projections during the NAR Real Estate Forecast Summit in December. Yun’s findings were agreed upon by all 20 participating economic experts.
Housing prices are expected to climb 8.0% next year and 5.5 percent in 2022, with 30-year fixed mortgage rates of 3.0 percent and 3.25 percent for 2021 and 2022, respectively. On the job front, an annual unemployment rate of 6.2 percent next year with a decline to 5.0 percent in 2022. Some welcomed information for a tight housing inventory is a whopping 1.50 million of housing starts next year and 1.59 million in 2022.
One consequence of the pandemic has been an increase in individuals working remotely. The share of the U.S. workforce working from home is estimated to be 18 percent in 2021 – down from 21 percent in 2020 – and 12 percent in 2022. This trend could lead to small declines in office and hotel vacancy rates in 2021, with a slight increase in retail vacancies next year.
Lawrence Yun summed up the findings by saying, “One astonishing development from 2020 has been the hot housing market as consumers eyed record-low mortgage rates and reconsidered what a home should be in a new economy with flexible work-from-home schedules."
After the year-end numbers come in for 2020, we will be able to analyze better what we might expect locally for the housing market. In addition to national efforts, Greater Chattanooga Realtors will continue to work with local decision-makers on issues that impact housing affordability and inventory.
I’m excited and ready to lead the Greater Chattanooga Realtors in 2021, and I’m proud to be part of the ever-evolving role that Realtors play nationally and in our local communities. That’s Who We R.