How COVID-19 Vaccines Will Affect the Housing Market
In spite of the countless hardships and havoc the coronavirus pandemic has wrought, the housing market has weathered it better than most, due in part to low mortgage rates and a shift from urban to suburban lifestyles. Now that the approved COVID-19 vaccines are starting to be rolled out (although slowly), the question on many minds is what effect vaccinations will have on U.S. real estate. Buyers and sellers alike want to know!
Although health experts say that the arrival of the COVID-19 vaccine implementation doesn’t mean that things will revert to “normal” right away, the expectation for the housing market is that it will remain relatively robust in the coming months and beyond. For instance, according to mashvisor, a firm providing real estate investment data analysis to real estate investors, industry trends will include an increased demand for metro markets, a continued increase in home prices throughout the coming year, and an exponential increase in home sales.
Also, with buyers increasingly using technology to shop virtually, mashvisor expects that demand will remain high “even in the dead of winter.”
The mashvisor experts summarize this expected strength in home sales by noting: “Despite the coronavirus pandemic, the U.S. housing market has been incredibly resilient. Home sales have grown by about 6% from 2019. Zillow predicts a 21.9% growth in 2021, which will be the highest annual sales growth since 1983. This exponential growth will be driven by the COVID-19 vaccine rollout and the subsequent economic recovery. Home sellers that have been holding back due to uncertainty will list their homes, thus adding more supply to satisfy the heavy demand in the housing market.”
Forbes Advisor predicts, too, that “new-home construction is expected to ramp up and more homeowners are likely to feel comfortable putting their houses on the market as people get vaccinated against the coronavirus,” adding that “these two actions are necessary before the number of homes for sale is likely to increase, which could help temper price growth.”
Robert Dietz, chief economist of the National Association of Home Builders (NAHB), adds that “builders could erect a million single-family homes and townhouses next year…that could help to ease the crunch.”
The vaccine is likely to spur economic recovery overall, which may also result in higher mortgage rates than what has been seen throughout the pandemic. This would obviously make homes more expensive, in addition to a resulting spike as competition remains high for available properties. Realtor.com, in fact, predicts that in the U.S. housing market home values will increase by 5.7% in 2021.
Realtor.com further forecasts that in light of vaccine distribution, “the housing market is expected to remain hot, but the frenzy that was a hallmark of the majority of 2020 is likely to die down,” with a prediction by realtor.com’s chief economist Danielle Hale that “we’re going to settle somewhere in-between where we were before COVID and where we were during COVID.”
This means that more [existing] homes will be on the market but an upswing in inventory will increase gradually. Realtor.com quotes Ali Wolf, chief economist for real estate consultancy Zonda, who explains: “Some people will feel comfortable listing their home during the first half of 2021…others will want to wait until the vaccines are widely distributed. This suggests more inventory will be for sale in late 2021 and into the spring selling season in 2022.”
With COVID-19 vaccine distribution continuing throughout the United States, people are beginning to see the light at the end of the tunnel. As the anxiety surrounding the pandemic starts to relent, it appears that experts are predicting a relatively strong Spring 2021 as buyers try to stay a step ahead of potentially higher mortgage rates toward the end of the year.