Residential Real Estate Stocks – New Jersey Business Magazine

Immovable

A need and desire for lifestyle change…should fuel a strong and growing real estate market in 2021 and beyond.

Real estate has remained a vehicle for wealth creation in the United States since the founding of the country. Although historically cyclical, the direction of value has always been upward. As we discovered in the momentous year 2020, a global pandemic did not alter real estate values.

People need and want a place to live, and they don’t create new lands. Interest rates and lifestyle transitions have caused a huge increase in the number of luxury, second and first home buyers adapting to a new lifestyle opportunity in across the United States with the rapid rise of the work-from-home or “gig economy”.

That said, the government’s ban on foreclosures and evictions from March 2020 will certainly have an impact as 2021 unfolds. The backlog of foreclosures is expected to be significant and will likely result in a temporary loosening of the balance between supply and demand. However, demand is still expected to exceed supply. The main difference today compared to the crisis of 2008, for example, is that the banks have not reverted to predatory adjustable loans granted to subprime borrowers, and we have only seen a further tightening of the mortgage qualification since the start of the pandemic.

We anticipate an extremely strong 2021-2022 for new home builders. As history has shown, low inventory, low interest rates and the desire to live at home are driving new home sales skyrocketing. All of these factors cause prices to rise quickly, but not as extreme as we saw in 2006-2008 before the stock market crash. Nevertheless, there is significant competition and bidding wars for quality homes on the market.

Commercial real estate, which has outperformed for many years, could be the biggest real estate loser for 2021, as many companies have moved employees out of expensive spaces into their personal homes. The full effects, short and long term, are not yet visible.

Consumption and work behaviors are changing. These changes will come with new habits in life, education and work. Business owners stop and ask themselves questions they’ve never asked before. In the past, office and retail space were expected in their area, but has that changed? How far will Americans go in the work-from-home economy? Will this last and become a new normal?

There are more questions than answers, but, again, what is true is the value of real estate. Low interest rates fostering affordability and the need and desire for lifestyle changes over the next couple of years should fuel a strong and growing real estate market.

About the Author

Dr. Brian Simon is the founder of several companies, but primarily spends his time as a principal broker at Fit Realty and as a partner in his home building business, Custom Homes. He is also the author of The Real Estate Journey. For more information, visit briansimon.com.

For more business news, visit NYC News Now.

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