A real estate bubble occurs when there is a rapid and unjustified increase in housing prices. Often this is caused by speculating investors blowing some hot air đŹïž
Like an overfilled balloon đ, the bubble eventually pops, and then a swift drop đ in home values occurs. This leads to reduced equity or, in some cases, even negative equity đ±
Fortunately, economists donât foresee that happening! đź
Prices are going up because thereâs a very low supply (homes for sale) and high demand (lots of buyers). And those market dynamics arenât expected to change any time soon.
đ Looking for guidance as you navigate this fast-moving market? Contact our team to learn more about current real estate trends and whether now is a good time to buy or sell.Â
While many areas of the economy have contracted, the housing market has stayed remarkably strong. Can the good news last?
COVID-related shutdowns began in March, real estate brokers and clients scrambled to respond to the change. Record-low interest rates led lenders to stop new underwriting, and homeowners debated whether to put their homes on the market. At the end of the year, average home prices were up 13.4% from the previous year, and with 13 fewer days on market .1
Now, as the spring market approaches, you may wonder whether the reliable times can continue. If you are a homeowner, should you take advantage of this opportunity? If you are a buyer, should you jump in and risk paying too much? Below, we answer some of your pressing questions.
Todays market vs. the 2008 meltdown?
Pandemic fears of an economic recession and a subsequent mortgage meltdown were at the forefront of homeowners. For buyers and sellers the two seemed to go hand in hand, as they did in the 2008 economic crisis.
The conditions of 2008 recession differ from the current downturn, with the housing market the source of good news.2 Historical patterns of housing prices remain stable. Homeowners are staying put, and investors are investing money in bricks and mortars to avoid an uncertain the stock market.
Lessons of 2008 show banks better funded, homeowners holding more equity, and economic activity focused on financial factors outside the housing market. As many industries quickly pivoted to work from home, early fears of widespread job-loss foreclosures have failed to occur. The Federal stimulus and the Paycheck Protection Program helped offset some of the worst early effects of the shutdown.
Are we facing a real estate bubble?
A real estate bubble occurs with rapidly rising housing prices and investor spectulation. When the values drop rapidly the real estate bubble pops. This leads to lower equity, or in some cases negative equity conditions.
Low-interest rates and lack of homes are attributed to current rising home prices. The principle of supply and demand works as it should. Experts predict a strong seller’s market for 2021, with increases in new construction.3 Allowing supply to gradually rise to meet demand, slow down rising home values, and offer a gentle correction.
Effects of low interest rates
Freddie Mac states, projected rates to continue at current low levels throughout 2021.4 Contributing to home affordability in markets considered overpriced. These low interest rates should keep the market lively and moving forward for the foreseeable future.
Effects of low inventory
Low inventory with high demand attribute to higher average home prices.5 Home prices will gradually ease, vaccinations rollout, buyer demand drives homeowners with delayed sales, and new home construction increases to meet demand.6
Arenât some markets and sectors appearing soft?
Stories of young professionals and families fleeing attached dwellings, high-priced urban areas to move to wide-open spaces of suburban and rural markets. Along with reinforced work-from-home policies that became permanent at some of the countryâs biggest companies.
The death of the city and the end of the condo market rumors of these two residential sectors were greatly exaggerated.
With vaccine rollouts, renters returned to major urban areas, attracted by the rise in available inventory and discounted rental rates.7 Laser-focused buyers looking for a single-family home now take a second look at condos.8 Nationwide condo prices lag behind those of detached homes. Observed are significant price increases and days fewer days on the market year over year.
The 2020 migration has spread the economic wealth to suburban and rural enclaves that normally donât benefit from increases in home values or an influx of new investment. As many of these new residents set up housekeeping in their rural retreats, theyâll revitalize the economies of their adopted communities for years to come.
How has COVID affected the âseasonalâ real estate market?
The real estate market is a seasonal phenomenon. The widespread shutdown in March 2020, which came at the beginning of the marketâs growth cycle in many areas, has led to a protracted, seemingly endless âhot spring market.â
Fannie Mae’s chief economist Douglas Duncan predicts slower growth from 2020 historic numbers, the outlook is positive as we embark on the 2021 spring selling cycle. Duncan expects an additional boost in the second half of 2021, as buyers return to business as usual and expect to put some of their pandemic savings to work for a down payment. We’re looking at a longer than usual, hot real estate market.
How will a Biden administration affect the real estate market?
A projected housing policy promises to boost the real estate market in many cases.10 Real estate investors bemoan proposed changes to 1031 Exchanges, the Biden plan for a $15,000 first-time homebuyer tax credit aims to increase affordability and bring eager new home buyers into the market. Biden’s policy identifies low inventory as the driving factor of unsustainable home values and geared towards affordability through investments in construction and refurbishment.
According to most indicators, the real estate news will be overwhelmingly positive throughout 2021, and possibly beyond. Pent-up demand, consumer-oriented policies, and a sustained low-interest environment and rising inventory, should help homeowners maintain their increased equity without unbalancing the market. The increase of long-term work from home policies promises to boost many markets now and in the years to come.
HAVE QUESTIONS? WE HAVE ANSWERS
Economic indicators and trends are national, real estate is local. We are here to answer your questions and help you understand what is happening in your neighborhood. Reach out to learn how these larger movements affect our local market and the value of your home.
5 Inspiring Home Design and Remodeling Trends for 2021
Weâve all spent a lot more time at home over the past year. Our homes have become our office, our classroom, our gymâand most importantly, our haven. It’s no surprise to discover that 5 Inspiring Home Design and Remodeling Trends for 2021 revolve around soothing color palettes, cozy character atmosphere, and quiet retreats.
We advise our clients to take modern design preferences, over-personalized or unpopular renovations can lower your propertyâs value. And selecting out-of-style fixtures and finishes could cause your home to feel dated quickly.
To help inspire your design projects this year, weâve rounded up five of the hottest trends. Keep in mind, not all of these will work well in every house. If you plan to buy, list, or renovate your property, give us a call. We can help you realize your vision and maximize the impact of your investment.
1. Uplifting Color Design
Colors are gravitating toward warm and happy shades that convey a sense of coziness, comfort, and wellbeing. This yearâs palettes draw from earthy hues, warm neutrals, and soothing blues and greens.1
White and gray colors are safe options. However, neutrals are increasing in popularity for walls, cabinets, and furnishings in 2021. For a fresh and sophisticated look, try one of these 2021 paint colors of the year:
Aegean Teal (coastal blue) by Benjamin Moore
Urbane Bronze (brownish-gray) by Sherwin-Williams
Soft Candlelight (muted yellow) by Valspar
On the opposite end of the spectrum, indigo, ruby, sapphire and plum are showing up on everything from fireplace mantels and floating shelves to fabrics and home accessories. These classic, rich hues can help bring warmth, depth, and a touch of luxury to your living space.
To incorporate these colors, designers recommend using the â60-30-10 Rule.â Choose a dominant color to cover 60% of your room. First, walls, rugs, and sofa might be varying shades of beige or gray. Layer a secondary color for 30% of the room. This might include draperies and accent furniture. Third an accent color for 10% of your room, showcased with artwork and accessories.2
After a decade of minimalism, thereâs been a shift towards highly-decorative and personalized interiors that incorporate more color, texture, and character. Clearly defined styles of mid-century modern, industrial, and a curated style replace modern farm homes with furniture, fixtures, and accessories that seem to have been collected over time.3
This trend has extended to the kitchen, where atmosphere has become as important as functionality. The ubiquitous all-white kitchen is fading in popularity as homeowners opt for unique touches that help individualize their space. If youâre planning a kitchen remodel, consider mixing in other neutralsâlike gray, black, and light woodâfor a more custom, pieced-together look. Replace Moroccan square tiles for a modern alternative with old-world flair.4
The pandemic forced many of us to rethink our home design. From multipurpose rooms to converted closets to backyard cottages, weâve had to find creative ways to manage virtual meetings and school. And designers expect these changes to impact the way we live and work for years to come.
Home builders predict the end of open-concept floor plans as we know them.5 Buyers are looking for separation and privacy. Cue the addition of alcoves, pocket doors, and sliding partitions that enable homeowners to section off rooms as needed.4
The necessity of a home office space is also here to stay. But what if you donât have a dedicated room? Alternative workspaces have become increasingly popular. In fact, one of the biggest trends on Pinterest this year is the âclofficeââessentially a spare closet turned home office. Searches for âhome library designâ and âbookshelf room dividerâ are on the rise, as well.6
With travel options limited right now, more homeowners are turning their vacation budgets into staycation budgets. Essentially, recreate the resort experience at homeâand enjoy it 365 days a year!
Bedrooms should be a soothing sanctuary for rest and relaxation. Minimalist decor and muted colors give way to bolder statement pieces. To create a “boutique hotel” look in your own bedroom, start with a large, upholstered headboard in a rich color or pattern. Layer organic linen bedding, a chunky wool throw, and finish the look with matching wall lights..7
Carry those vacation-vibes into your bathroom with some of the top luxury upgrades for 2021. Curbless showers and freestanding tubs continue to be popular choices that offer a modern and spacious feel, and large-format shower tiles with minimal grout lines make clean up a breeze. Add a floating vanity and aromatherapy shower head for the ultimate spa-like experience.4
Homeowners want to use outdoor their spaces. Backyard swimming pool sales skyrocketed in 2020, with many installers reporting unprecedented demand.8 New pools aren’t the only way homeowners can increase their outdoor areas this year.
The home design website Houzz recently named 2021 âthe year of the pergola.â Theyâre a relatively quick and affordable option to add shade and ambiance to your backyard.4 Decked-out, custom playgrounds for exercising (and occupying) the youngest family members who may be missing out on school and extracurricular activities.9
Don’t limit your budgt to the backyard, landscapers are reporting an increase in front yard enhancements, including porch additions and expanded seating options. Social front yards enable neighbors to stay connected and observe social distance guidelines.10
Learn how upgrades impact a homes value. Buyer preferences vary by neighborhood and price range. We can share our insights and offer tips on how to maximize the return on your investment. And if youâre in the market to sell, we can run a Comparative Market Analysis on your home to find out how it compares to others in the area. Contact us to schedule a free consultation!
Sources 5 Inspiring Home Design and Remodeling Trends for 2021:
The start of a new year always compels people to take a fresh look at their goals, from health and career to relationships and finance. But with historically low mortgage rates, increased home sales and price growth, and a tight housing inventory, the time is right to also make some homeownership resolutions for 2021. Check out how to discover key action steps to take to achieve your homeownership goals this year, whether youâre a home buyer, home seller, or a homeowner not yet planning on moving.
The return on investment for plumbing will vary from year to year and market to market. The importance of selecting faucet finish and style for your plumbing fixtures will add to your return on investment and increase your bottom line when it come times to sell your home.
As mentioned in my article about top 27 return on investments, updating plumbing depending on market can provide a 260% return on investment on average when selling a home.
Lighting size, placement and trends both inside and out when preparing your home for sale reaps one of the greatest returns on investments. Simple lighting improvements can be as easy as washing windows inside and out and replacing spent light bulbs. Â Othertimes you will need to make updates to compete with new and model homes in the same price range.
Refreshing the look of a room can be done by replacing old, dated light fixtures and ornately decorated fixtures that may not appeal to the broadest range of buyers. I typically recommend when providing home staging consultations that home sellers keep it simple and select lighting in a transitional style, which is neither traditional nor contemporary.
The great thing about transitional style is that it will give you a great updated look in a contemporary setting or a traditional interior setting. As for finishes, transitional styles are flexible allowing you to mix finishes with existing hardware, but if you want to match your finishes to your faucets and hardward, go right ahead.
According to the National Kitchen and Bath Association consumers are looking for contemporary spa like easy to clean bathrooms and kitchens with less clutter and clean simple lines, with LED lighting cited as an âin-demandâ kitchen feature for its energy efficiency (which is another hot buyer preference).
Knowing what lighting size, placement and trends when you are updating your home for sale will help you obtain a greater return on investment. Keep these simple home staging tricks handy as a practical solution for any home interiors lighting updates and you wonât go wrong.
Lighting Trends
Consumers love out door living and revamping garden areas, patios and porches can make your curb appeal really âshineâ. Â This will be the first impression buyers will have of your home.
Chandeliers arenât just for the dining room anymore and are making their way into spaces like studio apartments, attic bedrooms and small mother-in-law suites. The luxury market demands, dramatic, upscale and extravagant transitional crystal chandeliers.
Power in the shower continues its popularity as we head into 2015.
Silver, Chrome and Stainless steel have commonly been used in the kitchen but warm metals like gold, copper and bronze are the trend for 2015.
Image Courtesty Decor Pad
Image Courtesy KitchenModel.org
Image Courtesy Houzz
Lighting Placement
Lighting placement, size and how high you hang your lighting play an important role in the over all look and feel of a space.
When hanging lighting above your kitchen island hang 24-34 inches above the counter top.
Lighting diameter in the center of a room should measure 1/12th the size of the room to maintain a balanced look. Measure your rooms length and width and divide by 12 to get the proper size of the light fixture.
When hanging lighting above a table the diameter of the fixture should be 12â less than the width of the table.
Foyer light is placed 80-84â from the bottom of the chandelier to the floor. Center to the window and hang no lower than point of the second floor when the ceiling is really tall.
Table and bedside lamps should measure from the base of the shade and eye level from a seated position.
Lampshade Size
Sometimes your lampshade may be all that is needed to get an updated look. Follow these rules when updating your table lamp shades.
Shade length from top to bottom should be 65-80% of the base length. For example if your base length is 18â, the shade should measure 11â- 15â.
The diameter of the shade should be no more than 2â less that the base diameter. If you have an 18â base the width of the shade not be more than 16 inches.
