THE GREAT RESHUFFLE
One thing remained constant throughout 2020 – change. The pandemic shifted front runners and opportunity zones. Home buyers are valuing privacy, safety, space, less regulation, and access to the outdoors while their employers, favorite retailers, and restaurants are doing the same.
General interest in real estate accelerated, with Nest Seekers Consumer Sentiment data indicating unique visitor traffic on Nest Seekers’ website up 55% in 2020 over the prior year, and page views up 77%. The Hamptons saw an incredible 794% increase in traffic, driven by both the shift in national preference and premier of Million Dollar Beach House on Netflix.
Florida continues to receive attention as the preferred relocation hub of 2020. Palm Beach has been described as the ‘hottest market in the world,’ with average home prices soaring above $7 million. Palm Beach market reports indicate that single-family home sales in the area were up 33% in 2020 and 36% for townhouses/condos, despite scarce inventory, as many chose to leave urban density, high taxes and colder weather in trade for the Sunshine State. In Miami, single-family luxury home sales increased 120% in Q4 2020 and 88% for luxury condo sales, according to Business Journals’ data.
Many city-dwellers have chosen to shift their primary residences to the Hamptons, and thus, total Hamptons sales were up 80% in 2020. According to the Hamptons Market Data report, there were 70 sales in the $10 million+ market, up 126% from the year prior and 130 sales in the $5-$9.999 million market, up 106%. This boom is driven by the same lifestyle preference for more space, safety, and a slower pace that we have been seeing in the Florida market.
The Beverly Hills and Malibu markets, which had been running tight on inventory until September, also show new opportunity for buyers. The California Association of Realtors reported that buyers saved an average of 3% under list price in closed transactions during the third quarter with a 21.6 % increase in inventory year-over-year, creating continued buyer strength.
London’s market rebounded quickly in early Fall after the easing of lockdown, buoyed by pent-up demand, with price momentum up 6.6% over 2019 despite a fall of 0.6% in December, according to Rightmove data. The average time to secure a buyer in London decreased to 54 days in November 2020, from a peak of 88 days in May 2020. Rightmove also reported that the number of sales agreed in London in October 2020 was 57% up from October 2019.
THE YEAR AHEAD
Overall U.S. 2020 sales grew about 6% OVER 2019, despite obvious pandemic headwinds, and Nest Seekers’ expectations for 2021 are even stronger. Zillow is predicting 21.9% annual growth for 2021, totaling almost 6.9 million homes sold – which would be the highest annual sales growth since 1983. Interest rates are expected to stay RELATIVELY low for the foreseeable future, encouraging the country’s economic recovery and contributing to the bullish forecast. Purchase mortgage applications have risen consistently year-over-year since May, averaging 22% annual growth over that period. And an index of pending home sales from the National Association of Realtors also indicates double-digit annual growth since June, and was almost 20% year-over-year in October.
All indicators point to the suburban markets remaining strong, with new construction and move-in-ready opportunities selling at a 10-20% premium. Buyers will continue to capitalize on urban living opportunities at a discount, thus rebalancing in the long run. The influx of millennial and Gen Z buyers into the market, many of whom had de-prioritized home ownership until now, will also keep demand steady. Home price appreciation will reach its fastest pace since the Great Recession, as the inventory crunch continues to pit buyers against each other, competing for a scarce number of homes for sale.
Wall Street is also predicting a strong 2021, with the coronavirus vaccine rollout lifting the economy into the second quarter and home goods retailers like Home Depot, Restoration Hardware, and TJ Maxx will continuing to outperform the overall market as we upgrade our home’s livability and workability function. What we have termed as the ‘new normal’ as now just ‘normal’ – our county has accelerated its evolution and has become comfortable with the long-term lifestyle prospectus.