Heck of a year, to say the least. For the sake of brevity, let me be short and sweet. Here are my predictions for 2021.
The plague
The very obvious question is whether there will be a negative impact on real estate due to Covid-19/Coronavirus. Short answer, yes. Long answer, yes again. This is especially true in the retail space of the mall. Restaurants depend on the residual income of a prosperous society. America is a wealthy society. The per capita of just about every accoutrement in society is off the charts. The overabundance of restaurants, gyms, spas, supermarkets, and even tire repair shops pales in comparison to other societies and even Western democracies. Ergo, America has suddenly realized that it doesn’t need as many restaurants as it thinks it does, when eating at home is considered more economically sensible, in a time of uncertainty.
My sources of information, such as quarterly reports from Deloitte & Touché and CCIM (Certified Business Investment Managers), indicate that office space (for very obvious reasons), retail and multi-family housing will hit a rough patch in the next few years. next 18 months by mid-2022. But for industrial and warehouse space, life is exceptionally good. The need to accumulate resources and provisions for consumers is quite evident.
On a miscellaneous note, home sales, which are not related to commercial real estate, but are residential real estate, are doing exceptionally well. This strong disposition is the result of many Americans having abundant resources (and job stability), which allows them to buy homes and/or an upgraded home. This is also biased for fear of raising interest rates; the need for property, personal space, and solitude; and probably a bunker mentality, where existentially some fear hordes of people wandering desperately for food in Dawn of the Dead faux realism (and from cable news overload), but on the surface no threat, but only in one’s own psyche. It is important to note that despite the chaos, the unemployment rate is still only 6.7% as of November 2020.
Interest rates
As I correctly predicted last year, rates hit a new low, triggering a spike in market activity. Based on economists’ predictions I’ve read for 2021, because there’s some dissent within their mindsets, interest rates will fluctuate back and forth, but they should be about a fifth of a point lower than they were at the end of 2020. That works out to about 2.90% for the 30-year fixed rate.
sellers market
In most US locations, it will be a seller’s market, which is inversely related to demand. That is, when you have a higher demand from buyers, it will result in an increase in home prices, which will result in a seller’s market.
runner productivity
This revelation is really dear and close to my heart, since I was previously a commercial real estate broker for twenty years before I started buying houses on my own. The merger of technology for residential brokerage has been long in the making and will see a number of more efficient, perhaps competent, brokers emerge as the number of transactions closed is expected to increase in 2021. This is partly as a result of technological advances. As a counterpart, in 2019 the average number of homes sold by residential brokers was 50.7 homes. In 2021, there is expected to be a marked improvement in that number, with more average brokers taking less time to close trades.
