The year 2020 brought many changes in how we live and has made many reflect on what their home means to them. In central Puget Sound, the velocity of the housing market is in tight rotation, with the sales activity intensity for each new listing going under contract at a frenzy level and higher for most price ranges and areas.
Looking toward 2021, we anticipate the residential real estate market will continue to be very active, with strong buyer demand.
The Year 2020 Recap
Fortunately, we saw a checkmark-shaped housing market recovery in the year 2020.
1st quarter (Q1): There was a frenzy and extreme frenzy level of sales activity in many areas locally.
March/April: COVID-19 led us to adjust our business practices to support social distancing for buyers, sellers and agents. Additionally, home mortgage interest rates lowered.
May: The number of buyers increased to pre-COVID seasonal levels, but sellers lagged creating a virtually sold out situation.
June: Many lifestyle/destination/surrounding markets became virtually sold out as buyers were able to work from home.
Mid-June: The number of sellers increased to pre-COVID seasonal levels.
July through November: A substantial increase in the number of new resale listings in Seattle and on the Eastside brought record buyer activity in many markets, with the luxury market also at record transaction numbers. November temporary restrictions: the ban on open houses was reactivated, but once again the real estate market remained in full motion through private showings.
All of this led to market conditions of multiple offers for each new listing in most price ranges, creating premium pricing which benefits sellers.
Additional major events in 2020 to consider:
• The inflection point in society to further support diversity, equity and inclusion.
• Natural disasters, with wildfires and smoke affecting Western states.
After the 2020 holiday season, a surge of buyers will come into the market on Jan. 1, 2021. However, there will be few new listings until March 2021.
We anticipate the “cyclone” of housing market sales activity intensity will continue at extreme frenzy-level velocity (where about 90 percent of sales activity takes place) through April 2021. Then, sales activity intensity will probably go down one level of hotness to frenzy or surge over the summer as more listings come on the market for potential purchasers.
Only the city of Seattle has an adequate supply of new resale listings and unsold inventory, resulting in strong market conditions with surge-level sales activity intensity.
In other areas, we will remain virtually sold out throughout 2021 in the more affordable, mid-price ranges and into the upper end. The luxury market will remain strong due to the wealth effect
in the economy.
The strong price appreciation we saw in 2020 will continue in 2021 as the biggest price boost will occur within the first four months of the year.
Tips for buyers and sellers in 2021
For buyers, it’s crucial to be Buyer Ready – Day ONE. Your Broker Associate can consult with you to share strategies to win in multiple-offer situations, get pre-approved or fully underwritten through a lender, and receive instant email/text notification of newly listed properties.
Although it’s a seller’s market, being Market Ready – Day ONE as a homeowner elevates the interest of the backlog of buyers who will put an offer on your property. Our Seller Listing Launch® system combines the best in marketing and pricing strategy to help sellers obtain the best price.
Possible headwinds in 2021
In 2021, possible headwinds include decreased affordability due to price increases, a slight interest rate increase when the economy improves, and the potential for higher taxes on the state and federal levels.
While we are very thankful for the housing recovery we have seen in 2020, we know this has been a difficult year for many, including those who have lost a loved one due to COVID-19. Our hearts go out in support of those infected with COVID-19, as well as everyone impacted by job losses or the wildfires in Western states. We hope 2021 brings healing and peace, as well as an enhanced focus on diversity, equity, and inclusion.