While the housing market has seen a boom in homebuying demand since the onset of the pandemic, inventory is lacking and will most likely continue to be limited. That doesn’t mean active spring buyers will settle for less than the best. Today’s buyers continue to look for properties that feel move-in-ready and those they can easily envision living in. That means updating outdated decor with modern styling to get the most bang for your real estate buck.
The transformations below feature homes recently staged by our team that pair the homeowner’s furnishings with neutral wall colors, on-trend accents, and new arrangements to add engaging, fresh appeal.
For each of the rooms pictured above, we kept most of the existing furniture and added neutral paint, removed dark curtains, and replaced outdated accents with modern rugs, wall art, accent chairs, bedding, and pillows.
To update, brighten, and showcase the distinctive features of the rooms pictured above, we completely removed the sellers’ furniture and curtains and replaced them with neutral pieces that had cleaner lines and modern accents.
Patti Stern, principal, interior decorator and professional stager of PJ & Company Staging and Interior Decorating, has been decorating and staging homes since 2005.
Free for the taking and bursting with raw style, pallet wood has quickly become a favorite building material for savvy do-it-yourselfers. Pallet wood board is unique and there is rarely a need to distress this wood since most of it gains a natural, rich patina from exposure to the elements.
Without a doubt, you will absolutely relish making these do-it-yourself wood pallet projects. They are a fun and economical way to create a lively home and garden with a style that straddles edgy and traditional for truly a modern rustic look. Accessible to anyone with the motivation to source street-side pallet materials, most projects require only tools that you may already have on hand. With little more than a prybar, hammer and nails, cordless drill, and saw, you’ll be able to construct most of these do-it-yourself pallet projects in a day or two.
01of 25Pallet Herb Garden WallMessy ArtYou’ll break Instagram the minute you post this utterly charming pallet herb garden wall. Artist Zina and her husband mounted a full pallet on the backyard side of their house. Plastic potting trays fit neatly between the slots. The finishing touch: herb names painted on the garden wall in fancy script. Pallet Herb Garden from Messy Art
02of 25Wood Pallet Entryway CeilingCape 27 BlogSelf-described “interior design fanatic” Jessie at the home lifestyle blog Cape 27 spent next to nothing on a wood pallet living room wall, which left her extra materials. What to do? She continued the rustic look by tacking up the pallet boards to her exterior porch ceiling. This oh-so-simple project was as easy as taking down the light, power nailing a perimeter and field boards, then replacing the light. Exterior Entryway Pallet Ceiling from Cape 27 Blog
03of 25Wood Pallet Outdoor Table With Succulent GardenMorning ChoresDo you have an old, disused table? You’ll have this upcycled pallet project done in a snap. Face-nail or screw pallet boards to the top of the table, clear coat them, and you’re done. For a delightful extra touch, omit a center pallet board and replace with a low, 2-inch high potting tray and fill with succulents.Outdoor Table from Morning Chores
04of 25Wood Pallet Bed HeadboardStylizimoSatisfy your inner rustic-chic soul with this inventive pallet bed headboard. Source two pallets, thoroughly pressure wash them, and let dry for several days before attaching to your bed frame. You can clear coat them with satin polyurethane or leave the wood unfinished for a mixture of the primitive and the sophisticated.Pallet Headboard from Stylizimo
05of 25Wood Pallet Radiator CoverLantlivRadiators rank high on the list of unsightly home fixtures that cannot be removed. One way to hide your radiator is with possibly the least expensive radiator cover ever: a wood pallet. Simply knock off one side of boards with a hammer or pry bar. After cleaning it, you can place it in front of your radiator for instant coverage.Pallet Radiator Cover from Lantliv
06of 25Wood Pallet Kitchen BacksplashCirca DeeWant a real conversation piece in your kitchen? This do-it-yourself wood pallet backsplash fits the bill. Entrepreneur and antiques dealer Dana, of the design blog Circa Dee, wanted to spiff up her dated galley kitchen. A few pallets later, she had an inventive backsplash that got friends and family talking. She cut the boards into 18-inch sections and left the wood raw for maximum weathered effect. Alternatively, you may choose to seal the pallet boards for protection against moisture.Pallet Backsplash from Circa Dee
07of 25Wood Pallet BookshelfThe House of WoodGive your treasured books a new home with this quick and easy bookshelf made from free wood pallet boards. Mom, musician, and military wife Jen Woodhouse banged together this utterly charming bookcase in no time at all with four pallets and some extra pallet parts. You’ll have a blast doing the same with the help of Jen’s detailed instructions.Wood Pallet Bookshelf from The House of Wood
08of 25Wood Pallet Living Room SectionalHomeditEase back in this sectional sofa with a glass of wine, in the secure knowledge that you paid far less for this than if you had bought it at a furniture store. That’s because a double layer of free wood pallets form the base, with your only expense being the tatami mats and pillows on top. As a bonus, the pallets provide two layers of storage for flat items.Wood Pallet Sectional from Homedit
09of 25Nearly Free: Wood Pallet Bed FrameWonder ForestThey held up hundreds of pounds of tires; surely they can hold up a bed? Those were the thoughts of Dana Fox when she sourced free wood pallets at her local tire store. After removing a few pallet boards and screwing the remainder together at the center braces, she now had a practically-free bed frame that was ready for her full-sized mattress.Wood Pallet Bed Frame from Wonder Forest
10of 25Wood Pallet Compost BinThe Real FarmhouseThe compost bin that makes itself? Almost. Perfectly sized, wood pallets are practically made for compost bins. Compost bins always need a generous number of long slots to aerate the organic matter, so pallets form the perfect four walls of the bin. Besides the pallets, the only other material used: zip-ties. This is easy, fast, and you don’t even need a farm to begin composting your kitchen matter.Wood Pallet Compost Bin from The Real Farmhouse
11of 25Wood Pallet Potting BenchA Piece of RainbowTwo wood pallets and one coat of robin’s egg blue paint were all that was needed to make this lovely garden potting bench. Home and garden designer Ananda, over at the design blog A Piece of Rainbow, spent just one afternoon making this beautiful and functional potting bench for her garden.Wood Pallet Potting Bench from A Piece of Rainbow
12of 25Easy to Build: Wood Pallet Outside ChairFunky Junk InteriorsVirtually bursting with personality, this wood pallet exterior chair is a fantastically unique twist on outdoor furniture. Donna, at Funky Junk Interiors, calls this “the easiest build in the world.” And yes, those are real coffee bean sacks as upholstery on top of 5-inch rubber foam mattress material which Donna ordered cut to size. Any patio chair that combines wood pallets and coffee sacks is sure to be a conversation piece at your next outdoor party.Wood Pallet Outside Chair from Funky Junk Interiors
13of 25Weathered, Distressed Wood Pallet Accent WallDiva of DIYBecause of their rich, complicated texture, wood pallet boards might be overkill for covering every wall in your house. But for an accent wall? Absolutely. The nail holes, chipping paint, and variegated colors of these pallets make this accent wall a true focal point. Leanne Lee, of design blog Diva of DIY, says that the secret to varied colors is to wet the boards with bleach and water, leave them outside, then pull boards out of the sun in stages. Doing this in separate batches creates boards in a wide spectrum of colors.Wood Pallet Accent Wall from Diva of DIY
14of 25Wood Pallet “Wild Things” Beast SignWeekend CraftScare them or kiss them: which is it? You’ll never know with this Where the Wild Things Are themed do-it-yourself sign made from wood pallets. Maurice Sendak’s classic story comes alive in vivid detail with this amusing project that anyone can make with just a few pallet boards, hammer, and nails. You don’t have to be a graphic artist, since Weekend Craft creator Michelle includes a stencil with her instructions.Wood Pallet Wild Things Sign from Weekend Craft
15of 25Wood Pallet Triangle Reading NookKojo DesignsYour child will just adore wiling away the hours with books in this wood pallet triangle reading nook. Just a couple of pallets, a few scrap pallet pieces, and rolling casters are enough to get started on this cheerful addition to any nursery or child’s bedroom. Because this is for a child, take special care with the pallet boards’ surface condition. Fill in holes with wood filler, remove staples, and plane or sand away splinters and other sharp spots.Wood Pallet Child’s Reading Nook from Kojo Designs
16of 25Wood Pallet Chevron Coffee TableThe Merry ThoughtChevron pattern wood pallet boards inject lively visual interest in this DIY coffee table from crafters Caitlin and Manda at The Merry Thought. All pallet boards are glued and brad-nailed directly onto a plywood base for structural support.Wood Pallet Coffee Table from The Merry Thought
17of 25Rustic, Low-Cost Wood Pallet Home BarInfarrantly CreativeWhen you have a large home bar to build and you’re on a strict budget, should the default choice be ultra-expensive solid hardwood? Of course not. Do like Rebecca Farrant did when a friend asked her to build a home bar for almost no money. Rebecca used weathered pallet boards to instantly give it the look of a decades-old pub.Wood Pallet Home Bar from Infarrantly Creative
18of 25Wood Pallet Board Rustic Table CenterpieceHappy at HomeYour table guests will be buzzing about this inventive and dead-simple rustic table centerpiece. To round off the shabby chic look, paint lightly with white, then scrape down with a putty knife. If you find the prospect of taking on wood pallet projects a bit intimidating, this is an easy way to get your feet wet. It’s also a project that allows you to concentrate more on the decorative finish than on construction.DIY Rustic Wood Pallet Board Table Centerpiece from Happy at Home
20of 25Wood Pallet Garden Tools RackFix LovelyDo you find that your long-handled garden tools like shovels, rakes, and hoes are always falling down? This instant hack is the ultimate lightning-quick do-it-yourself project. Since wood pallets don’t always come in mint condition, this is a great way to use up one of your dirtier wood pallets. Attach the back side of the pallet to your shed wall with four screws and that’s it, you’re done. With this kind of do-it-yourself pallet project, organization feels great!Wood Pallet Garden Tools Rack from Fix Lovely
21of 25Wood Pallet Fireplace SurroundAddison Meadows LaneWarm, cozy, and definitely one of a kind, this wood pallet fireplace surround is a weekend project that lets you exercise your creative skills. Stacey, over at the design blog Addison Meadows Lane, gives you detailed instructions, down to the very last screw and nail. But you can do whatever you want and make it your own. Pallet Fireplace Surround from Addison Meadows Lane
22of 25Wood Pallet Porch SwingTwelve Oaks ManorHang this wood pallet swing from a porch ceiling, a stand, or the limb of a backyard tree. Whatever your heart desires, this DIY project is as cheap as the cost of a heavy-duty chain, cushions, and some paint or wood stain. Wood Pallet Porch Swing from Twelve Oaks Manor
23of 25Wood Pallet Bar Cart My Pinteresting LifeNot all wood pallet creations must have the weathered look. You can purchase new pallets or, like Holly at the blog My Pinteresting Life, you can search long and hard for that elusive find: clean, new pallet wood. She found these at her local post office and turned them into a charming bar cart.Pallet Wood DIY Bar Cart from My Pinteresting Life
24of 25Wood Pallet Room DividerMy Friend StaciDo you need a little privacy? After making this super-simple wood pallet room divider, you’ll wonder why you didn’t do this sooner. Just four pallets form this self-supporting divider. Tons of space on the divider give you ample room for screwing in binder clips to display favorite family and vacation photos, as well as curios, postcards, and theater tickets. Wood Pallet Room Divider from My Friend Staci
25of 25Wood Pallet Outdoor Double Lounge ChairFreckles and FluffFair weather was made for chilling out with a friend in your do-it-yourself double wood pallet lounge chair with matching cocktail table on rolling casters. Liberally coat this pallet chair with your favorite exterior latex paint both for color and for protection against the elements.Wood Pallet Double Lounge Chair from Freckles and Fluff
In zones where winter has put plants in sleep mode, now’s the best time to prune certain specimens. Use heading cuts to prune back to a healthy bud and promote side branching, and thinning cuts, which take the branch to the nearest limb, to maintain the plant’s shape. Snip smart, and you’ll see more blooms and thicker foliage.
What to Prune in Early Spring
Summer-flowering deciduous shrubs
These are shrubs thatbloom on new growth, such as butterfly bush, rose of Sharon, and crape myrtle.
When and why: These are still dormant in late winter/early spring, making it easy to see your cuts—and they’ll heal up quickly with the flush of new growth in spring, which is when the shrubs set the summer’s buds.
Random-branching conifer trees and shrubs
Examples of conifer trees and shrubs include arborvitae, juniper, yew, and holly.
When and why: Prune in early to late spring, once lighter-colored new growth appears, which gives time for cuts to heal and new buds to form. Use thinning cuts back to the main stem to tame overgrown shrubs; for heading cuts, prune back to a branch that has needles or leaves on it so new growth can sprout.
Deciduous perennial vines
These types of vinesbloom on new growth, such as trumpet vine, climbing hydrangea, and Boston ivy.
When and why: Heading cuts in late winter or early spring control growth and encourage branching. Ivies can be trimmed anytime, but save heavy shaping of deciduous varieties for late winter/early spring, before leaves appear.
Wait on Pruning These Specimens
Prune azaleas and rhododendrons in spring or early summer, after flowers wither, so as not to remove next year’s buds and reduce blooms.
Traditional mophead hydrangea sets buds on the previous year’s growth, so while it’s safe to snip spent flowers and dead branches, avoid major shaping until summer’s end.
To aid in the prevention of chimney fires and carbon monoxide intrusion and to help keep heating appliances and fireplaces functioning properly, the Chimney Safety Institute of America (CSIA) offers the following safety tips:
Get an annual chimney check. Have chimneys inspected annually, and cleaned as necessary, by a qualified professional chimney service technician. This reduces the risk of fires and carbon monoxide poisonings due to creosote buildup or obstructions in the chimneys.
Keep it clear. Keep tree branches and leaves at least 15 feet away from the top of the chimney.
Install a chimney cap to keep debris and animals out of the chimney.
Choose the right fuel. For burning firewood in wood stoves or fireplaces, choose well-seasoned wood that has been split for a minimum of six months – one year and stored in a covered and elevated location. Never burn Christmas trees or treated wood in your fireplace or wood stove.
Build it right. Place firewood or firelogs at the rear of the fireplace on a supporting grate using the top-down method.
Keep the hearth area clear. Combustible material too close to the fireplace, or to a wood stove, could easily catch fire. Keep furniture at least 36” away from the hearth.
Use a fireplace screen. Use metal mesh or a screen in front of the fireplace to catch flying sparks that could ignite or burn holes in the carpet or flooring.
Install smoke and carbon monoxide detectors. Place detectors throughout the house and check batteries in the spring and fall. When you change your clocks for Daylight Savings Time, remember to check your batteries.
Never leave a fire in a fireplace unattended. Before turning in for the evening, be sure that the fire is fully extinguished. Supervise children and pets closely around wood stoves and fireplaces.
The CSIA recommendsannual inspections performed by CSIA Certified Chimney Sweeps. These chimney sweeps have earned the industry’s most respected credential by passing an intensive examination based on fire codes, clearances and standards for the construction and maintenance of chimney and venting systems. The National Fire Protection Association also recommends that all chimneys are inspected on an annual basis.
A hardworking space doesn’t have to be hidden away behind closed doors-—as long as it’s thoughtfully designed. Take this “corner office” created by Tee Miller in the living room of her Mercer County, NJ, home.
Before
Courtesy of www.beauteefulliving.com
Shown: Immediately visible upon entering the house, the storage unit functioned well but didn’t enhance the room’s looks.
After
Courtesy of www.beauteefulliving.com
To integrate the space with the rest of the room, Tee started by clearing out the clutter on the existing shelving unit, which was full of function but too dark and clunky for her current style. She followed up by giving the storage piece a couple of fresh coats of no-primer-needed chalky matte white paint.
She bought a small writing desk to tuck in between the bookshelf and the window, and an upholstered chair that could double as extra living room seating for guests. New organizers put office supplies and paperwork within arm’s reach, while pops of pink and green, fabric touches, and a fluffy rug keep the workspace from looking sterile.
Now Tee, who blogs at beauteefulliving.com, can write, work on small projects, and pay bills without shutting herself off from her family. “I’m thrilled that this area helps keep me organized while it still blends seamlessly with our living room,” she says. See the entire project at Beauteeful Living.
Shown: The homeowner is so happy with the new office nook, it has inspired her to make a revamp of the rest of the living room her next project.
$17 per quart of chalky white paint
$164 for a small writing desk
How Much Does it Cost?
Painted the existing bookshelf with 2 quarts of linen-white chalky matte paint, sealed with a clear matte top coat the homeowner already had $34
Organized office supplies and paperwork with new storage boxes, baskets, shelf dividers, and magazine holders $108
Purchased a new desk and chair $294
Created a mini gallery wall with a DIY bulletin board and framed artwork $30
Filled the shelves and desktop with new and old accessories, including plants and an LED lamp $86
Added warmth and texture with a rug and a throw borrowed from other rooms in the house $0
Few will be reluctant to say goodbye to 2020. With vaccines rolling out, the days of the deadly pandemic that bludgeoned the nation’s economy seem to be numbered. Good riddance! But the soaring home prices that became a hallmark of the COVID-19 crisis may be here to stay.
Realtor.com®’s 2021 housing forecast predicts record-high prices will continue rising in 2021, delivering a blow to first-time buyers and those on a budget. Mortgage interest rates, which hit historic lows this year and helped fuel the go-go growth in U.S. housing markets, are also expected to tick up again, making monthly housing payments ever more expensive.
So folks shouldn’t hold their breath for a bargain.
However, the pace of the wild price growth seen in 2020 will slow. Prices are expected to jump 5.7% next year as a result of more properties forecast to hit the market, particularly in the second half of next year. While still unwelcome news for buyers, the double-digit price hikes seen this year aren’t expected to carry over into the new year.
“We expect affordability to become a bigger challenge. It’s going to make [housing] more expensive,” says realtor.com Chief Economist Danielle Hale. “[But] home prices will rise slower than this year, on the upper end of what we consider normal price growth.”
The forecast anticipates mortgage rates will begin slowly going up toward the last half of 2021, reaching 3.4% by the end of the year. Mortgage rates are currently at an all-time low of just 2.72% for 30-year fixed-rate loans in the week ending Nov. 25, according to Freddie Mac. While a roughly 70 basis point rise isn’t dramatic, it will make those monthly mortgage payments even pricier. This has the potential to price out some buyers or force others to purchase cheaper abodes in less desirable locations.
However, even higher prices, and therefore higher required down payments, aren’t likely to keep the hordes of determined buyers at bay.
Sales of existing homes (i.e., previously lived in abodes) are projected to increase 7% in 2021. That’s coming as folks stuck inside their homes for months on end are seeking larger residences or ones with different features. Younger millennials are competing with older members of Generation Z for starter homes, and baby boomers are downsizing. Many apartment dwellers are also seeking homes on their own.
Ironically, it’s those high prices that are keeping prices from rising even further.
“Home prices can’t outpace income growth indefinitely. The higher prices rise, the harder it is for more buyers to get into the market. That tends to dampen demand,” says Hale. That means that with less competition, prices don’t have as much room to rise.
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The bright spot for buyers is that more homes are likely to become available in the last six months of 2021. That should give folks more options to choose from and take away some of their urgency. With a larger selection, buyers may not be forced to make a decision in mere hours and will have more time to make up their minds.
The inventory bump is expected to be due to a combination of more sellers listing their properties as well as builders completing more abodes. Realtor.com predicts single-family housing starts, which are homes that have begun construction but aren’t yet completed, will rise 9%. And it’s sorely needed as there was an estimated shortfall of almost 4 million new homes heading into this year.
The new construction, while often more expensive than existing homes, are likely to appeal to move-up buyers looking for larger abodes with the latest amenities. Once those folks purchase these brand-new abodes, they typically list their existing homes, adding more inventory to the market.
“A lot of that new construction is not necessarily targeted at first-time buyers,” says Hale. “But we have seen builders shift what they’re building to better reach first-time home buyers.”
While 2021 is expected to be another banner year for sellers, most are also buyers. And while they can use their home equity to help finance their new abode, they’re still likely to be affected by the inventory shortage and loftier home prices and mortgage rates.
“Sellers are still expected to get top dollar for their home sales,” says Hale. “The biggest challenge is finding their new home.”
However, if 2020 has taught us anything, it’s that everything can change in an instant. If the nation undergoes additional lockdowns due to COVID-19, then fewer homes may go up for sale and the market could slow. If everything goes well with the vaccines being rolled out early, then the housing market could benefit with additional inventory and sales.
Another wildcard is the possibility of sustained economic pain. The country could still fall into a double-dip recession if unemployment remains high and businesses continue to suffer. Most folks need jobs to afford home purchases. If the economy doesn’t improve, it could put a dent in the market.
“The value of housing is tied to the economy,” says Hale. “As long as the economy continues to rebound, I expect the housing market will do well.”
2021 National Housing Market Forecast and Predictions: Back to Normal
To say 2020 was a year of surprises is an extreme understatement. What started off as a bright year for the housing market and the economy was soon derailed by a global pandemic and severe economic recession. As detailed by my colleague, George Ratiu, the economic rebound has been sharp, but is by no means complete and created distinct winners and losers among sectors in the economy. Read more detailed thoughts on the overall economic context and outlook, here. One of the big winners has been the housing market, which saw home sales and prices hit decade-plus highs following decade lows in the span of just a few months. We expect housing’s winning streak to continue in 2021 as seasonal trends normalize and some of the frenzied momentum fades thanks to fresh affordability challenges. Below you’ll find our forecast and housing market predictions on key trends that will shape the year ahead.
Realtor.com 2021 Forecast for Key Housing Indicators
Housing Indicator
Realtor.com 2021 Forecast
Mortgage Rates
Average 3.2% throughout the year, 3.4% by end of year
Existing Home Median Sales Price Appreciation
Up 5.7%
Existing Home Sales
Up 7.0%
Single-Family Home Housing Starts
Up 9%
Homeownership Rate
65.9%
Seasonality and 2020 Context: The Baseline
In 2020, the seasonal pattern for home sales and other metrics was thrown out of whack by the timing of the coronavirus arrival as well as the shelter-at-home orders and other measures that were rolled out to arrest the spread of the virus. These measures were implemented just before what’s normally the best time of year for sellers to list a home for sale, and housing inventory never fully made up the gap as buyers returned in earnest before sellers. This uneven return of buyers and sellers created a housing market frenzy that pushed the number of sales to decade highs while time on market dropped to new lows. This trend persisted well into the fall, a time when normal seasonal trends typically favor home buyers over sellers, thus buyers hoping for the usual break in 2020 were likely disappointed. Understanding this backdrop will be key to evaluating the data as it comes in for 2021 as we expect the housing market to settle into a much more normal pattern than the wild swings we saw in 2020. Year over year trends will need to be understood in the context of the unusual 2020 base year.
Home Sales
After whipsawing in tremendous fashion in early 2020, the housing market more than regained its early-year momentum to finish at new highs for home sales in the fall. For the year, we expect 2020 home sales to register slightly higher (0.9%) than the 2019 total thanks to the strong, if delayed, buying season. Going into 2021, we expect home sales activity to slow from those frenzied levels which represented underlying housing demand as well as make-up buying for a spring season many buyers missed out on plus a sense of urgency brought on by record low mortgage rates. As sub-3 percent mortgage rates start to feel less exceptional, buyers may not react with the same immediacy to take advantage of them, initially, though as rates start to rise in the second half of 2021, buyers may feel the need to hurry purchases along to lock in a low rate. Additionally, as make-up buying from the disruption of spring 2020 fades, home purchases will be propelled by underlying demand in 2021. This demand will come from a healthy share of Millennial and Gen-Z first-time buyers as well as trade-up buyers from the Millennial and older generations.
We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year. While home sales are expected to lose some momentum over the last months of 2020, the shallower than normal seasonal slowdown creates a higher base of activity leading into 2021 that is roughly maintained for the first half of the year. As vaccines for the coronavirus become broadly available to the public, and economic growth reflects the resumption of more normal patterns of consumer spending, home sales gain even more in the second half of the year.
Home Prices
With the already limited inventory of homes for sale relative to buyers pushed further out of balance by the pandemic that brought out buyers in mass and kept many sellers pondering their options, home prices skyrocketed surging up more than 10 percent over year-ago levels by the late fall. We expect the momentum of home price growth to slow as more sellers come to market and mortgage rates settle into a sideways pattern and eventually begin to turn higher. The large number of buyers in the market, including many Gen-Zers looking to buy their first-home and Millennials who are both first-time and trade-up buyers will keep upward pressure on home prices, but rising numbers of home sellers will provide a better relief valve for that pressure.
We expect home prices in 2020 to end 7.6% above 2019, after a seeing near record high boost in the summer and early fall, but beginning to decelerate into the holidays. From there, we expect price gains to ease somewhat in 2021 and end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year.
Inventory
Although the housing market is healing and by many measures doing better than before the pandemic, inventory remains housing’s long haul symptom. There were an insufficient number of homes for sale going into 2020 in large part due to an estimated shortfall of nearly 4 million newly constructed homes. Much to the surprise of many, the coronavirus and recession did not lead to a distressed seller driven inventory surge as we saw in the previous recession, but further reduced the number of homes available for sale. Starting in fall 2020 the housing market saw more than half a million fewer homes available for sale than the prior year. We expect to see an improvement in the pace of inventory declines starting just before the end of 2020 that will continue into Spring 2021, so that while the number of for-sale homes will be lower than one year ago, the size of those declines will drop. We expect a more normal seasonal pattern to emerge which will contrast with the unusual 2020 base and lead to odd year over year trends, but taken as a whole we expect inventories to improve and, by the end of 2021, we may see inventories finally register an increase for the first-time since 2019.
While total inventories will remain relatively low thanks to strong buyer demand, the number of new homes available for sale and existing home sellers, what we call “newly listed homes,” will be more numerous which will help power the expected increases in home sales.
Key Housing Trends
2021 TRENDS: Millennials & Gen Z
The largest generation in history, millennials will continue to shape the housing market as they become an even larger player. The oldest millennials will turn 40 in 2021 while the younger end of the generation will turn 25. Older millennials will be trade-up buyers with many having owned their first homes long enough to see substantial equity gains, while the larger, younger segment of the generation age into key years for first-time homebuying. At the same time, Gen Z buyers, who are 24 and younger in 2021, will continue their early foray into the housing market.
In early 2020, younger generations, including Millennials and Gen Z, were putting down smaller downpayments and taking on larger debts to take advantage of low mortgage rates despite rising home prices. In fact, only a quarter of respondents to a summer survey reported lowering their monthly mortgage budget or not changing their home search criteria in response to lower mortgage rates. The other three-quarters said low rates would enable them to make a change to their home search, and the most commonly cited change was buying a larger home in a nicer neighborhood.
We expect these trends to persist as rising home prices require larger upfront down payments as well as a bigger ongoing monthly payment due to the end of mortgage rate declines. Early in the pandemic period, there was concern that temporary income losses could prove to be particularly disruptive to younger generations’ plans for homeownership, as these were the groups expected to face income disruptions that might require dipping into savings which would otherwise be used for a down payment. Thus far, these disruptions have not had an effect on overall home sales, and some home shoppers report an ability to save more money for a downpayment as a result of sheltering at home, but we are still not completely through the pandemic-related economic disruption.
2021 TRENDS: Remote Work
As we discussed in early 2020, the ability to work from home is not new. In fact, as long ago as 2018, roughly one-quarter of workers worked at home, up from just 15 percent in 2001. More recently, a scan of real estate listings on realtor.com in early 2020 showed that in the ten metro markets where they are most common, as many as 1-in-5 to 1-in-3 home listings mentioned an “office.” Remote working was already more common among home shoppers than the general working population, with more than one-third of home shoppers reporting that they worked remotely even before the coronavirus. Additionally, remote working has gained an unprecedented prominence in response to stay-at-home orders and continued measures to quell the spread of the coronavirus. Another 37 percent of home shoppers reported working remotely as a result of the coronavirus. While a majority of home shoppers reported a preference for working remotely, three-quarters of workers expect to return to the office at least part-time at some point in the future. However, the ability to work remotely was a factor prompting a majority of respondents to buy a home in 2020. This was the case even when most expected to return to offices sometime in 2020. As remote work extends into 2021 and in some cases employers grant employees the flexibility to continue remote work indefinitely, expect home listings to showcase features that support remote work such as home offices, zoom rooms, high-speed internet connections, quiet yards that facilitate outdoor office work, and proximity to coffee shops and other businesses that offer back-up internet and a break from being at home, which can feel monotonous to some, to become more prevalent
2021 TRENDS: Suburban Migration
With remote work becoming much more common, home shopping in suburban areas had a stronger post-COVID lockdown bounceback than shopping in urban areas, starting in the spring and continuing through the summer. These trends, which have been visible in rental data as well, suggest that city-dwellers—freed from the daily tether of a commute to the office and looking for affordable space to shelter, work, learn, and live—were finding the answer in the suburbs. In fact, a summer survey of home shoppers showed that while a majority of respondents reported no change in their willingness to commute, among those who did report a change, three of every four reported an increased willingness to commute or live further from the office.
Even before the pandemic, homebuyers looking for affordability were finding it in areas outside of urban cores. The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown.
Housing Market Perspectives
What will 2021 be like for buyers?
The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Areas that can ramp up affordable housing supply will benefit and see an influx of buyers.
While buyers will be able to visit homes in person, a strong preference for most shopping to buy, they will take advantage of the industry’s acceleration toward technology to check out homes, explore neighborhoods, and research the purchase online, saving time and energy to focus on a more selectively curated list of homes to view in person.
Although the pace will slow from late 2020’s frenzy, fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers learning the ins and outs of making a major decision in a fast-moving environment. Buyers who prepare by honing in on the neighborhood and home characteristics that are must-haves vs. nice-to-haves and lining up financing including a pre-approval will have an edge.
What will 2021 be like for sellers?
Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise. Sellers hoping to see further double-digit price gains will likely be disappointed, but those setting reasonable expectations can expect to see a timely sale and will want to focus on their next move.
Housing Market Predictions 2021 – Metro Area Breakdown
You’ve heard it before, but we can’t stress this enough. Making sure that water can flow freely through your gutters now will help prevent icicles and ice dams from forming later.
Particles and sediment can collect over time in the bottom of your water heater, hindering the unit’s efficiency. Flush the water through the drain valve to clear out the material and keep your heater functioning at its best.
Ceiling fans are everyone’s favorite summer budget-saver. But they can help out in the winter as well! Have your ceiling fans move in a clockwise direction so they push hot air along the ceiling towards the floor. If they’re going counterclockwise, they won’t be as effective.
It may not be the most fashionable tip, but window insulation film can keep up to 70% of heat from leaking out of the windows. You won’t mind the appearance when you’re toasty warm in your house!
In a drafty room, heat escapes under the door. When winterizing your house, place draft guards by the doors to prevent heat loss. It’s a simple solution that keeps your house warm and saves you from wasting energy.
Cost: $10 to $20 or free if you place a rolled towel at the bottom of the door.
Regularly changing the filters in your central air and heating system can significantly improve its efficiency and longevity, while easing the pressure on your wallet.
For maximum heat retention, pack fiberglass insulation around basement doors, windows in unused rooms, and window AC units. Make sure your attic floor is insulated, too. Just remember to be careful and wear gloves!
The US Department of Energy says you can save as much as 1% on your energy bill for every degree you lower your home’s temperature during the winter. Install a programmable thermostat now and save money by keeping the temp down when you’re not at home.
Any remaining gaps in siding, windows, or doors can be filled with caulk. For extra drafty windows and doors, caulk the inside too, pulling off moldings to fill all gaps in the insulation.
Your chimney is a huge source of heat loss come wintertime. If not in active use, plug it up with a chimney balloon when winterizing your home to keep drafts out and heat in.
Cost: $25 to $60 depending on the size of the balloon.
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With the right mantel decor, your fireplace will stand out prominently as the focal point of a room. Try one of these fireplace mantel ideas that combine artwork, mirrors, vases, and other accents to transform a lackluster hearth into the center of attention.
With the right mantel decor, your fireplace will stand out prominently as the focal point of a room. Try one of these fireplace mantel ideas that combine artwork, mirrors, vases, and other accents to transform a lackluster hearth into the center of attention.
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My Pinteresting LifeNot all wood pallet creations must have the weathered look. You can purchase new pallets or, like Holly at the blog My Pinteresting Life, you can search long and hard for that elusive find: clean, new pallet wood. She found these at her local post office and turned them into a :max_bytes(150000):strip_icc():format(webp)/WoodPalletRoomDivider-59112edf5f9b586470a51ac5.jpg)
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