More people will put their homes on the market, suburban amenities will approach parity with those in urban centers, and the discounted condo market will light up, once most Americans are vaccinated and the economy fully reopens, Redfin Chief Economist Daryl Fairweather said in a report outlining post-pandemic predictions for the housing market.
The red-hot growth of home prices will fall from today’s double-digit pace but remain elevated, and apartment rents, especially those for short-term leases, will rise quickly, Fairweather said.
The record-low home inventory that has bedeviled homebuyers in recent months will improve as more people seek to take advantage of high home prices and those who kept their homes off the market for fear of exposure to the virus finally make the leap, Fairweather said. Nevertheless, the number of homes for sale will still remain below pre-pandemic levels and bring little relief for homebuyers.
The limited supply will drive up rental prices in hot migration destinations like Atlanta and Austin, as some would-be purchasers give up and decide to rent, Fairweather said. Short-term rentals will become especially popular as some remote workers opt for nomadic lifestyles, moving from city to city without the constraints of on-site employment requirements.
Condominiums, which were largely shunned during the pandemic, will become sought-after assets as homebuyers, priced out of the single-family market, take another look at condo life, Fairweather said, noting that condos have sold at a 17.3% discount to single-family properties during the pandemic. While detached-home prices will continue to rise, the pace of their gains will not match that of condominiums, the economist said.
The home-price growth will slow to around 5% per year, as mortgage rates rise and Americans rediscover other uses for their money besides housing. Pent-up demand for vacations, dining and parties is likely to reduce the amount people are willing to spend on their homes as life approaches something resembling a pre-pandemic state, Fairweather said.
Finally, the pandemic-driven rebirth of the suburb will result in increased amenities as many people continue to work from home, at least part time. Many businesses that cater to workers are likely to relocate to the suburbs to satisfy the increased need for restaurants, coffee shops and happy hours in former bedroom communities, according to Fairweather.