The pandemic of Covid-19 has devastated everything equally. New Jersey Home Builders will explain the situation of the real estate market in 2021. The effects of covid-19 have crippled many economies and raised the unemployment rates. But what happened to the real estate market in 2020? What is the current situation in the market?
The Questions to Be Answered
The situation will be discussed by answering three questions. These are three-category questions that will explain the situation accurately. The questions are:
- How resilient was the real estate market before the breakdown of covid-19?
- What is going on in the real estate market right now?
- What could happen to it in the future?
How Resilient Was The Real Estate Market Before the Breakdown of Covid-19?
The value of homes reached heights after the era of the great recession. From 2012- 2020, an annual raise of 5.8% was calculated in the values of houses. But what made the home values so high? The answers are a low interest rate on the mortgage. They were combined with a reduced supply of housing. Before the great recession, people thought of buying a home as an investment. This led to the massive demand for the construction of new houses. It gave rise and boosted the real estate market. But the scenario changed after the recession. From 2010 to 2020, the construction of dwellings slowed down. Because of plenty of homes, the government reduced the housing supply. The reason for this was low margins on the construction of new houses. The cost per foot square for new projects was very expensive in some locations. Therefore, the builders decided to stop constructing in those areas at that time. Due to all of this, the housing supply shrunk, and the demand rose. As a result, people agreed to pay more and began to outbid one another. The houses at that time began to sell within 24-48 hours after listing. The sellers were the kings at that time. But the situation is different now. How? Home builders New Jersey have discussed it below
What Is Going on In the Real Estate Market Right Now?
As the pandemic of covid-19 hit everyone, tables have turned upside down. More clearly, the demand has fallen more than supply due to unemployment. Currently, the buyers are not buying the properties. Similarly, the sellers are not selling the properties. The house listings have decreased this year. Due to lockdown, people are touring houses using zoom, skype calls, or with the 3D virtual tour. But there is a difference between a walkthrough tour and an online tour. Therefore, the trend of online touring houses is not so beneficial for the real estate market. The sale of homes dropped in 2020. In the months of April and May, the sales of homes dropped down to the lowest level. The values of houses decreased more than they were in the housing crisis of 2007. The case is the same in 2021 too. The real estate market is going through a declining phase right now. The decrease in home sales is due to a high rate of unemployment. People do not have job security right now. They are earning lower than before.
Based on this situation, there is a question now. Are we going towards recession in the real estate market? The answer is no because of many reasons. New Jersey Home Builders will tell you below. Before the pandemic, the real estate market included:
- Small loans.
- Educated and qualified borrowers.
- Stable debt-to-income ratio.
- Lower delinquency.
Due to these, the market is now different from 2008. The recession in the current situation is more stable than in 2008. Therefore, the housing market is stronger than it was before. There are chances of quick recovery in the market. The construction, buying, and selling of houses will get boosted. Once after lockdown will be eased, and jobs will be offered to people.
What Could Happen to the Real Estate Market in The Future?
Until now, with New Jersey Home Builders, you have discovered that:
- Home values have increased over the decade.
- The interest rates are low on mortgages.
- The borrowers are more qualified presently. Therefore, the chances of a significant recession in the real estate market are low.
- The housing supply has been restricted in the past years. The situation is different now. The balance of supply and demand seems to be in favor of buyers.
In the future, if you want to buy a property, go for it. The reason is the current situation of sellers. If you want to sell your house, wait and hold for some time. The sales of homes are lower than before. It is high time for buyers to invest in the real estate market. They can negotiate more on the actual price with the sellers. There is no fear of getting outbid. The buyers can ask for additional concessions, repairs, and other services.
Those who are investing in the housing market in 2021 will have many favors in the future. They will have more negotiating power and strength than the sellers. They will be in control after the removal of pandemic effects. Visit the website of Home Builder New Jersey for more details about what 2021 has for the housing market.
New Jersey Home Builders have analyzed the past and present scenarios of the housing market. Based on the analyses, the real estate market will rise again. After four to six months, the housing market will be the same as before. With all the hustles and outbidding. It’s high time for the readers of this article to gear up. Make the right decision for the future and prepare yourself for the perks.