REI Predictions for 2021

2020 was a year full of surprises-both good and bad. Here’s the good news: real estate experts are saying that 2021 will be more predictable than last year, and their forecasts are uplifting.

We put together a survey of what’s on the horizon for 2021, featuring the state of the housing market and the best real estate investment strategies to use.

Housing Market Predictions:

Moving into 2021, what can we expect the housing market to look like? 2020 was a seller’s market with low inventory, record low-interest rates, and high demand for housing. How will these market aspects, combined with the effect of COVID-19, shape the real estate market for investors in 2021?

Look Out For a Spike In Foreclosures

Due to mass unemployment as a result of the coronavirus and a spotty recovery plan under Trump’s administration, there could be a surge in available foreclosures. If many current homeowners have been unable to pay their mortgages, these homes could be going up on the market.

When it comes to finding houses to flip, real estate investors, can find great deals among foreclosed homes. These bank-owned homes are generally priced below market value because they cost banks money to hold. Therefore, they are willing to sell them quickly at below-market prices.

In a market where prices are rising and inventory is low, this could be the exact recipe real estate investors need to make their next killer investment.

Expect The Demand For Housing To Continue Rising

With housing demand already high, investors might be waiting for this trend to collapse. The truth is, it’s not likely. 

The Biden administration is working to dole out a number of housing initiatives, many of which will make homeownership more affordable. Between a $15,000 tax credit for first time home buyers and down payment assistance for service workers, Biden hopes to incentivize purchasing a home. In addition, the federal government will likely attempt to keep interest rates down as the economy continues to recover from the pandemic.

These factors combined with the new shift towards at-home work will make it more feasible than ever for people to purchase homes, meaning there will be a steady stream of buyers ready to purchase from real estate investors.

The Hottest Housing Markets Are Shifting

Before investing in property in 2021, be sure to do your research on the location. Of course, this goes without saying. But some of the previously “hot” markets that have been thriving for years have recently come to a halt due to the pandemic and resulting lifestyle changes.

The new trend is that people are moving away from large cities. Here are the main reasons why:

• Employees have more mobility due to remote work.
• Cities are unaffordable during an economic crisis.
• Cities have lost their appeal, as COVID-19 has limited the way people socialize.

So, which markets are dying, and which markets are heating up? According to Zillow’s data, there will be a surge in migration to the Sunbelt states.

In 2021, these markets are cooling down the fastest:

• New York City
• San Francisco, CA
• Los Angeles, CA
• Philadelphia, PA
• Minneapolis, MN

On the other hand, these cities are heating up:

• Austin, TX
• Phoenix, Arizona
• Nashville, TN
• Tampa, FL
• Denver, CO

Some other markets to watch are:

• Charlotte, NC
• Raleigh, NC

Strategy Predictions:

Rental Property Investment Will Be Rocky

Yes, 2021 is a new year, but we are unfortunately bringing COVID-19 with us, and all of its negative effects. Due to the pandemic’s toll on rental property owners, 2021 could be another rocky year for this investment strategy. That’s not to say it’s not worth continuing to rent properties, especially if this is your real estate investment strategy of choice. It is important to note, however, that 2021 is a unique year for real estate investment, and rental property owners should proceed with caution.

Between the eviction moratorium, unemployed tenants, and a shift towards homeownership, rental property owners should be mindful of where they invest and what tenants they rent to. Choosing one of the booming markets mentioned above is a great choice for rental property investment. And in 2021, more than ever, tenant screening will be critical for real estate investors. Job security and the ability to pay should be top of mind when leasing your property.

Finding Houses To Flip Is a Smart Move

Better than rental property investment is finding houses to flip in 2021. The following factors are creating the perfect recipe for house flipping to be a highly lucrative investment strategy this year:

• new inventory opening-up
• foreclosures ready to hit the market
• a steady stream of eager buyers
• rising home prices

As long as investors focus on housing markets that are heating up, it should be an easy year to sell most properties. There might be an opportunity for cheap real estate in places like New York City, but keep in mind, these kinds of investments will be riskier.

Micro Flipping Is The Future of Real Estate Investing

Almost every industry in the world is changing to adapt to new technology, and real estate is no different. 

It used to be that real estate transactions were slow-moving, leads were generated through networking in-person, and real estate investors relied on real estate agents for property data. In 2021, real estate investors can find houses to flip with a few taps on their cell phone, or even through a voice command. And the rule about flips needing to be distressed properties? No longer the case. 

Micro flipping consists of buying and selling a home in a week or less, without completing any improvements or even seeing the home in person. The real estate investor simply pockets the difference in sales price – usually thousands of dollars. The key to success in micro flipping? Having real estate data and leads at your fingertips.

If you are a real estate investor who typically focuses on rental properties, and you’d like to change or supplement your strategy, micro flipping could be for you. Micro flipping is an excellent choice if you do not have the experience or desire to take on a rehab project.

Real Estate Investment Software Will Give Investors an Edge

No matter the real estate investment strategy they are using, real estate investors who leverage powerful software to do the job will see more success in 2021 and beyond. It will simply be too difficult to compete in the market without the data real estate investment software provides.

Looking for software to help you find, fund, and flip deals fast? Try a free demo of Connected Investors’ PiN software, here.