Guest Article By: Homelight
Didn’t it feel like stores were running out of everything? It was hard to find basic things like toilet paper, paper towels, disinfectants and even soap! Thankfully, 2021 has been much kinder in that regard and stores are fully stocked with these commodities. Unfortunately, that’s not the case in the housing market.
Real estate agents from all corners of the country report a housing shortage and according to HomeLight’s 2021 agent survey, 91% of agents say inventory is lower than expected and it’ll only get worse.
The current state of the housing market is alarming, but it doesn’t necessarily mean it’s going to last forever. Real estate agents have a few thoughts regarding what factors could alleviate the strained market. Let’s take a look.
Vaccine distribution
Vaccine distribution is going to play a big role in the housing market. Half of surveyed agents say that people will be more willing to enter the market as more people get vaccinated. The vaccine roll out has agents optimistic about future inventory and 53.6% of agents say that if a homeowner is hesitant about listing their houses now, they’re going to make plans to list before the end of the year.
Selling secondary or vacation homes
The pandemic has caused many businesses to allow employees who could work from home to do so. There’s a big possibility that remote work will become a permanent policy for many businesses, and if that’s the case, 37% of homeowners would consider relocating. For families who own a vacation or a secondary home, 49% of agents believe the prospect of remote work will entice homeowners to set down roots in one location and either put their other property on the market or turn it into a rental property – both of which would be helpful because finding a rental is as tough as buying a house in some areas!
Tax incentives for first-time buyers and sellers
The Biden administration has issued a tax credit designed for first-time homebuyers. This credit would allow homebuyers to access the $15,000 that they’d normally claim on their taxes right away. They’d be able to use that money to use as a down payment, which certainly can help people get that 20% down payment. With that said, if first-time buyers take advantage of this credit (combined with low interest rates), that could make the inventory problem worse.
But this could be offset if there was a credit for sellers where they would be exempt from the capital gains tax. The way this credit could work would be that when a property is sold, the seller wouldn’t be taxed on any profits between $250,000 and $500,000. Of course, the plan would only be available for a certain length of time – it wouldn’t be permanent.
Housing shortage will not be permanent
If inventory doesn’t replenish, this could be problematic in the foreseeable future. People who have to buy and sell at the same time are especially going to struggle because if their house sells quicker than they’re able to find a house, they could struggle to find a rental in the meantime.
The future of the housing market is relatively uncertain. Homeowners were reluctant to place their houses on the market at the height of the pandemic, but as more communities get vaccinated, that could change. Real estate agents are optimistic that the market will balance out and there will be enough houses to meet demand.
The question remains… At what cost? Affordable housing is scarce as it is, but house prices have risen steadily during the past year. Will buyers be able to afford a house? That remains to be seen.
