Real estate is a sign of wealth for many, while some depend on it for housing. Many investors have also made it their most promising asset tool. No matter why you are buying property, you should keep track of the factors that affect its value.
The sector has boomed a lot owing to various factors ranging from low mortgage rates to stimulus packages from the government. While the virus still keeps mutating, the government has pushed the economy to get the jobs back. Real estate seems to be one of the largest employers too.
Let’s find out the factors that have contributed to a resurgence in real estate in 2021.
Rise in Affordability
With vaccine drives in full swing, a positive impact has been seen on the real estate sector. The developers are leaving no stone unturned to get their workers inoculated as well. Thus, the workforce has already started pending construction to get the buyers up and running. However, the financial markets are still volatile. You can see that developers are keeping their fingers crossed. Moreover, industries have opened up.
Many employees have also received an increment in their salaries. This had ended the ‘wait and watch phase’ of 2020 when businesses were closed for over two months. A new government has also led to better promises and possibilities. A short recession is also one of the reasons that have contributed to the affordability part. If it were too long, the market could have slumped again.
Reduced Mortgage Rates
If NAR reports are believed, sales in September rose to an all-time high in the last 14 years. The main reasons can be attributed to the low-interest rates, as banks and financial institutions are also lagging in meeting their sales targets over the last year. This has fueled a surge in demand with a low supply of ready properties. The market volatility has led many buyers to believe that owning homes will fix their financial position.
With rents coming in slowly and no-rent in certain cases, many investors and homeowners have chosen to claim capital tax relief or allowance on an investment property. It is applicable on property that is used for business purposes. Rental leases are a prime example here. This seems to act as a breather for the investors and homeowners who have rental homes on lease. Moreover, many have also received stimulus packages from their banks for the same. Additionally, many banks also gave a three-month relaxation on mortgage loans to parties, who came forward and requested. This has acted as a positive sign and example to other buyers who want to instill positivity in the markets.
Partiality for Suburban Homes
Even before the pandemic, many residents were looking for opportunities to leave their small apartments in urban areas. The shift in mindset had already started with many eager to explore the countryside and suburban options. Such locales promise better layouts and larger houses. However, the pandemic had held up plans for most. Thus, the easing restrictions only made it easier for that market to decide in 2021 quickly.
There is another reason why people are shifting from the concrete jungle into suburbs and rural areas. The work-from-home culture has been here to stay for some time now. Thus, it has made it easy for such a shift. Now, employees do not have to shell out more on transportation costs, too.
There are still some issues with the supply chain in real estate. And that has forced buyers to look for resale options. You will find resale homes selling faster as they are readily available. Moreover, no one is ready to wait for developers to complete projects that hang in an air of uncertainty owing to the pandemic in both phases. People have kept money aside, and with preapproved loans, they don’t want to wait any longer to buy their priceless possessions.
Many developers are not willing to take a chance by keeping home prices on the higher side. Therefore, you can avail of low prices at this time while they release pending stock as fast as they can. This way, these businessmen are quickly trying to recover the lost man-hours and losses suffered therein during the lock-downs. Moreover, developers are sure that the virus will still be around in various forms for some time. Thus, keeping stocks would be too risky, lest a third or more dangerous phase comes to haunt everyone.
That said, you will see that the market will remain hot until the end of 2021 and in the first few months of 2022 when developers will quickly release stocks of 2019-20. Moreover, the government does not want to let this sector slump like others in the hope of a better economy.