The Chicago Association of REALTORS®, the “Voice for Real Estate” in Chicago since 1883, represents over 17,000 members from all real estate specialties including commercial sales, development, property management, appraisal, auctions and residential sales.
On Thursday, January 7, we hosted our popular 2021 Market Outlook event. We kicked off the year with an economic forecast featuring three leading real estate economists on what we can expect from 2021. Danielle Hale of realtor.com®, Brandon Svec of The CoStar Group and Gail Lissner of Integra Realty Resources – Chicago joined us to provide their insights into the residential, commercial and rental real estate markets not only in Chicago but also throughout the U.S. and globally.
What can you expect from 2021? We gathered five takeaways from the event to help you get a jumpstart on the year.
Performance Will Be Dependent On What Occurs With the COVID-19 Pandemic
The COVID-19 pandemic has created a lot of uncertainty and a drop in consumer confidence in the real estate market. Both Lissner and Svec agreed that the rental and commercial markets’ performance in 2021 is dependent on the widespread distribution of the vaccine. When that happens, we can expect a more normal and stable commercial and rental market.
You May See More Middle to Low Price Home Builds in 2021
According to Hale, part of the inventory strain is a result of the lack of low and middle-priced homes throughout the U.S. Also, millennials are still the most important drivers in the real estate market. She said they are seeing a lot of correlation between age and affordable markets, as markets with the most affordability have the highest homeownership rate for young buyers.
She believes that builders are finally catching on to the trend, and 2021 will possibly be the year we see more inventory in this price range.
Low Interest Rates and the Rebounding Economy Will Continue to Drive Residential Sales
A trend that we have already been seeing in the market since the end of the stay-at-home-order is likely here to stay. The combination of the rebounding economy and low interest rates will continue to drive buying and selling in the Chicago market as we move into 2021, said Hale. Her prediction is that throughout the U.S., we will likely see a 7% increase in home sales and a 5.7% increase in home prices.
Demand is Favoring the Suburbs, Chicago Neighborhoods
Although the rental market in the suburbs was strong, there was growth, but not a significant spike in rental growth or occupancy in the suburbs, Lissner said. Data showed renters moving from downtown, but these renters could have moved to other Chicago neighborhoods, decided to purchase homes instead of rent or even move out of state.
Hale echoed this; according to recent realtor.com® surveys, demand for homes in the suburbs is driven by affordability, more space or a combination of both.
Expect Rent Spikes Downtown When People Return to Work
With the distribution of a vaccine on the way, it is likely we will see a return to office life downtown. Lissner believes more people will be drawn back downtown once people start to return to their offices. Because of this, she also believes we’ll see a spike in rentals in 2022 with a return to work and little supply to go around.
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