Here’s What Real Estate Professionals Need to Know As 2021 Comes to an End
From the incredibly hot housing market to the abrupt end of Zillow's iBuying program, 2021 has been an action-packed year in the world of real estate.
Although the pace of real estate news might have felt overwhelming this year, it’s important for agents to keep up with what’s going on in the industry. Your clients should see you as a trusted resource and industry expert, which means being able to answer their questions about anything from soaring home prices to iBuying.
So, as the year comes to a close, we’ve compiled a list of things we’ve learned this year that you should know going into the next, including a few statistics that have helped us understand the headlines.
1) Average Homes Prices Surge
When you think of the real estate market in 2021, what comes to mind? No matter where you are in the United States, you likely have first-hand experience navigating this incredibly hot market. Whether you’ve had buyers adding enticing clauses to their offers in an attempt to nab a home or sellers cashing in, the low-inventory market has defined 2021.
“Since the COVID-19 pandemic began, the real estate market has been on a wild ride of unprecedented highs and lows — record-high home prices on one side, record-low mortgage rates and available homes for sale on the other,” Realtor.com reported. “It’s been a time of overwhelming stress for many, gigantic profits for some, and great disorientation for most of us.”
The typical home in the United States was worth $312,728 as of 10/31/21 — a 19.2% increase from a year earlier, according to Zillow. Home values are expected to rise another 13.6% by October 2022.
2) U.S. Census Data Shows Where Americans Are Moving
New data from the U.S. Census Bureau was released this year, providing key insights on U.S. residents and where they live. The findings are among the results of the 2020 census, a national survey that’s conducted every ten years to provide a highly accurate snapshot of the country and its demographics.
Here’s what we learned:
- Many people moved to the South and West sides of the country, and metro areas swelled, with 86.0% of the U.S. population now living in a metro area.
- Overall, the country’s population increased by 7.4% from 2010 to 2020 to reach a total population of 331.4 million. It was the lowest population increase since the 1930s.
- Homebuilding in the United States slowed while the rate of vacant homes plummeted. The number of housing units across the country grew by only 6.7% from 2010 to 2020 — about half the rate of growth during the previous decade — and the rate of vacant houses dropped from 11.4% to 9.7%.
3) Zillow’s iBuying Fiasco Invites Questions
When Zillow abruptly shut down its iBuying program, Zillow Offers, in early November, the news shook the real estate industry, leaving many to wonder about the future of iBuying, which had become an increasingly common phenomenon in recent years.
The iBuying program’s failure “amounts to one of the sharpest recent American corporate retreats,” The Wall Street Journal reported.
“It said it would close Zillow Offers, which was responsible for the majority of the company’s revenue but none of its profits; cut about 2,000 jobs, or a quarter of its staff; and write down losses of more than a half-billion dollars on the value of its remaining homes.”
When Zillow shut down its iBuying program, the company owned an estimated 9,800 homes and was in the process of buying 8,200 more, The Journal reported. That’s about 18,000 homes that would have to be offloaded, many of them at a significant loss.
4) Interest in Second Homes Soared
In the months after COVID-19 hit the United States, vacation home sales shot up, likely the combined result of low-interest rates, a desire to escape amid social distancing and lockdown, and an unprecedented ability to work from anywhere for many Americans.
Vacation home sales rose by 16.4% from 2019 to 2020, outpacing the overall growth in existing-home sales, which was 5.6%, a June 2021 report from the National Association of REALTORS® found.
The soaring rate of vacation home sales continued into 2021: In January through April, “vacation home sales jumped 57.2% year-over-year compared to the 20% year-over-year growth in total existing-home sales,” NAR reports.
The share of vacation homes in the housing market increased from 5% in 2019 to 5.5% in 2020, the report says. In January through April of 2021, that share rose to 6.7%.
5) The Demographics of Homebuying Have Shifted
Millennials have made up the largest share of homebuyers since 2014, and this year, they represented about 37% of buyers, according to NAR’s 2021 Homebuyers and Sellers Generational Trends Report. Gen Z made NAR’s list for the first time, with people aged 18 to 21 making up 2% of homebuyers.
Millennials are also the most likely to be first-time homebuyers. The report found that 82% of younger millennials (buyers 22 to 30 years old) and 48% of older millennials (buyers 31 to 40 years old) are first-time homebuyers.
Gen Xers (41 to 55 years old) made up 24% of homebuyers, while younger Baby Boomers (56 to 65 years old) and older Baby Boomers (66 to 74 years old) made up 18% and 14%, respectively. The Silent Generation (75 to 95 years old) represented only 5% of homebuyers this year.
Looking to 2022 and Beyond
So much happened this year in the world of real estate, and we can only imagine what might come in 2022. What was the biggest thing you learned about the industry this year? Do you have any predictions for next year? Share your thoughts in the comments below!
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