{"id":72328,"date":"2021-03-31T05:00:38","date_gmt":"2021-03-31T12:00:38","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=72328"},"modified":"2021-03-31T08:57:31","modified_gmt":"2021-03-31T15:57:31","slug":"ways-housing-market-will-change-after-pandemic","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/ways-housing-market-will-change-after-pandemic\/","title":{"rendered":"Five Ways the Housing Market Will Change After the Pandemic"},"content":{"rendered":"<p><em><strong>Here are the ways I expect the housing market to change once most Americans are vaccinated and the economy fully reopens.<\/strong><\/em><\/p>\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter wp-image-72329 size-large\" src=\"https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920-1024x683.jpg\" alt=\"\" width=\"1024\" height=\"683\" srcset=\"https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920-1024x683.jpg 1024w, https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920-300x200.jpg 300w, https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920-768x512.jpg 768w, https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920-1536x1025.jpg 1536w, https:\/\/www.redfin.com\/news\/wp-content\/uploads\/2021\/03\/alcohol-492871_1920.jpg 1799w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/p>\n<p>&nbsp;<\/p>\n<h2><span style=\"font-weight: 400;\">Home values will grow as the economy recovers, but at a slower pace as higher mortgage rates temper demand<\/span><\/h2>\n<p><a href=\"https:\/\/www.redfin.com\/news\/real-estate-home-value-pandemic-february-2021\/\"><span style=\"font-weight: 400;\">Double-digit home-value growth<\/span><\/a><span style=\"font-weight: 400;\"> will end as the U.S. reaches herd immunity and the economy rebounds. That\u2019s because mortgage rates will make buying a home more expensive, and Americans will have more options for how to spend their money. Instead of spending on homes, Americans will want to spend on activities like vacations, parties and dining. Some people will be eager to buy a home because they will feel more confident in their own economic prospects once the economy recovers. But some people will look at how expensive homes have become and hold off. As a result, home values will rise about 5% per year, which will be more in line with the growth of the overall economy.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As the economy recovers, mortgage rates will likely increase to pre-pandemic levels of around 3.5% for a 30-year fixed rate mortgage, making borrowing to buy a home more expensive than it is now. Since the <\/span><a href=\"https:\/\/www.nytimes.com\/2021\/02\/01\/business\/economy\/cbo-economy-estimate.html\"><span style=\"font-weight: 400;\">economy is already doing better<\/span><\/a><span style=\"font-weight: 400;\"> than many economists anticipated, there is a small risk that the trillion- dollar stimulus package could inject too much money into the economy and cause inflation and even higher mortgage rates of over 4%.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">More people will list their homes for sale<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When the pandemic ends, the number of homes for sale should increase from <\/span><a href=\"https:\/\/www.redfin.com\/news\/coronavirus-pandemic-real-estate-impact-charts\/\"><span style=\"font-weight: 400;\">record lows<\/span><\/a><span style=\"font-weight: 400;\">, but will likely remain below pre-pandemic levels, so homebuyers won\u2019t see much relief. Five percent fewer homes were listed for sale in the past 12 months than in the year prior, and currently new listings are down 12% from last year. If most people are vaccinated by 2022, I predict that the coming year will bring a 10% increase in new listings.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">More homeowners will decide to list in order to cash in on high home prices. And <\/span><a href=\"https:\/\/twitter.com\/FairweatherPhD\/status\/1372310147457024008?s=20\"><span style=\"font-weight: 400;\">a small portion<\/span><\/a><span style=\"font-weight: 400;\"> of those who were reluctant to sell during the pandemic because of fear of exposure to the coronavirus will be ready to list once vaccinated. Some homeowners who have been in forbearance will want to sell once forbearance ends to pay off their missed mortgage payments. But many new homeowners who locked in a mortgage rate below 3% during the pandemic won\u2019t want to sell and give up their low monthly mortgage payments.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">The condo market will heat up<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As the economy reopens and more people are back to work, more people will be looking to buy a reasonably priced home. And right now the most reasonably priced homes are the condos that buyers shunned during the pandemic. During the pandemic, <\/span><a href=\"https:\/\/www.redfin.com\/news\/single-family-home-premium-condo\/\"><span style=\"font-weight: 400;\">condos sold at a 17.3% discount <\/span><\/a><span style=\"font-weight: 400;\">to single family homes, the largest discount since at least 2013, but post-pandemic condo prices will likely grow faster than single family home prices and the discount on condos will shrink.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">\u201cIf you want to buy a condo, now is the time,\u201d said <a href=\"https:\/\/www.redfin.com\/city\/16163\/WA\/Seattle\">Seattle<\/a> Redfin agent Ben Stanfield. \u201cI tell my buyers that if they\u2019re open to looking at condos, we have the ability to negotiate on price and include favorable offer terms like an inspection contingency or a long escrow period. My personal opinion is that the condo market will start to see signs of life coming back in around October.\u201d<\/span><\/p>\n<p><a href=\"https:\/\/www.redfin.com\/news\/single-family-home-premium-condo\/\"><span style=\"font-weight: 400;\">Prices are already growing faster in urban areas<\/span><\/a><span style=\"font-weight: 400;\">, where condos are more common, than in suburban or rural areas. Soon homebuyers will see the value in the perks of owning a condo, like shared amenities such as pools and gyms.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Suburbs will start to feel more like cities<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When the pandemic ends, <\/span><a href=\"https:\/\/www.redfin.com\/news\/survey-remote-work-migration-homebuyers\/\"><span style=\"font-weight: 400;\">many people will continue working from home<\/span><\/a><span style=\"font-weight: 400;\"> at least part-time, but they will begin taking their lunch and coffee breaks outside their home. This means the kinds of businesses that cater to workers will relocate to suburban areas where more of their customers will be during the day. For example, <\/span><a href=\"https:\/\/www.delish.com\/food-news\/a34551483\/starbucks-us-store-closures\/\"><span style=\"font-weight: 400;\">Starbucks is closing stores in urban areas<\/span><\/a><span style=\"font-weight: 400;\"> while opening new stores in the suburbs, and <\/span><a href=\"https:\/\/www.usatoday.com\/story\/money\/2021\/02\/17\/unemployment-coronavirus-cities-lose-jobs-suburbs-gain-during-covid\/6760123002\/\"><span style=\"font-weight: 400;\">small businesses in cities are recovering at a slower pace<\/span><\/a><span style=\"font-weight: 400;\"> than small businesses in the suburbs. Over time, suburban communities will start to feel like more cities with more new restaurants, coffee shops, and happy hour spots opening.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The takeaway for homebuyers and homeowners is that homes in the suburbs could become even more desirable thanks to an increase in amenities. The value of a home is closely tied to what amenities are close by, and in the future more suburbs could have it all&#8211; schools, parks, restaurants, coffee shops, and bars.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Rents will rise quickly, especially for short-term rentals<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Post pandemic, many people will decide to rent instead of buy a home simply because buying a home will be too expensive. Rents in expensive job centers like <a href=\"https:\/\/www.redfin.com\/city\/35948\/NY\/Manhattan\">Manhattan<\/a> and <a href=\"https:\/\/www.redfin.com\/city\/17151\/CA\/San-Francisco?utm_source=google&amp;utm_medium=ppc&amp;utm_term=aud-366049486516:kwd-331783994579&amp;utm_content=452245764673&amp;utm_campaign=1022864\">San Francisco<\/a> will likely stay below pre-pandemic levels because remote workers will have more options for places to live away from their corporate headquarters. But in popular migration destinations like <a href=\"https:\/\/www.redfin.com\/city\/30818\/TX\/Austin\">Austin<\/a> and <a href=\"https:\/\/www.redfin.com\/city\/30756\/GA\/Atlanta?utm_source=google&amp;utm_medium=ppc&amp;utm_term=aud-814883197671:kwd-349287040996&amp;utm_content=458456458019&amp;utm_campaign=1024810\">Atlanta<\/a>, rents will increase more quickly because even more people will want to live in these less expensive cities when the economy is fully open and safe.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Short-term rentals will be especially popular. More remote workers will adopt a nomadic lifestyle, where they roam from city to city with no home base at all. A remote tech worker might spend part of the year working from headquarters, part of the year working from a satellite office, and the rest of the year in a vacation destination. This will cause prices for short-term rentals to increase.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here are the ways I expect the housing market to change once most Americans are vaccinated and the economy fully reopens. &nbsp; Home values will grow as the economy recovers, but at a slower pace as higher mortgage rates temper demand Double-digit home-value growth will end as the U.S. reaches herd immunity and the economy [&hellip;]<\/p>\n","protected":false},"author":13160,"featured_media":72332,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center 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