When it comes to the real estate market for commercial and residential properties, the next year has signs both positive and negative. Low interest rates continue to push prices higher for many properties, while a downturn in the economy due largely to the pandemic adds uncertainty for buyers and sellers.
A look at the potential trends for 2021 offers insights on what to expect.
Expectations for the national housing market
Forbes predicts 2021 will see more sales and higher prices for residential housing. One economist for a realty company expects nationwide sales to grow by 7% and prices to increase at a clip of nearly 6%. Analysts base these predictions on several likely factors:
- Strong demand
- A recovering economy
- Low mortgage rates
- More remote workers
Mortgage rates could rise slightly, somewhat affecting affordability of properties. Experts believe the market will still favor sellers, though buyers may benefit from favorable interest rates and an increase in properties for sale toward the end of the year. Potential disruptions in the supply chain concern many analysts. This could delay timelines for new construction.
Headwinds likely to impact commercial market
Business Insider reports that the commercial real estate market faces several obstacles as well as some opportunities. Finance concerns for some companies and downsizing considerations put downward pressure on real estate transactions. High rent obligations for certain sectors of the business world also could impact the availability of office space.
On the plus side, some large companies continue to seek out more office space, and the growth in e-commerce creates demand for warehousing properties. Growth in medical companies, streaming services, cloud data and ghost kitchens could ramp up demand for commercial space in 2021.