Let’s face it: 2020 was a year of economic turmoil for many markets. Not only has this affected the stock and financial market for many companies, but this has also affected different facets of society. Industries from different sectors have been making drastic changes to many of their daily operations to ensure that there is still business continuity, despite factors that might hinder revenue gains.
Much of the COVID-19 pandemic, which has caused a major economic recession, has affected various “essential” industries reliant on a steady flow of foot traffic and interactions. In most cases, these industries are in the food and hospitality industry. But other industries, such as the property management industry, have also been affected.
Many real estate and mortgage-issuing agents are quite aware that they are not the only ones suffering from an economic downturn. Since last year, mortgage rates in 2020 have been giving many homeowners and potential clients a big sigh of relief from lending costs.
But compared to last year, many individuals are a bit more optimistic about what 2021 has to offer, especially when most businesses are already re-opening as we transition back towards a normal life. These new business trends have surged the confidence back in the market, which has then caused an influx of investors and more potential customers.
However, predicting how the real estate industry will look in 2021 is easier said than done. Here’s what you’ll need to know when it comes to current trends in the property management sector and their effects on consumers.
All-time Low Rates in 2020
First and foremost, we must discuss one of the most important aspects and factors in the industry: rent and mortgage rates. Since last year, the median rates have been staying below 3% ever since the last few days of July. But this year, most are saying that these rates will be revamped throughout much of 2021.
Many employees in the industry would attribute the record-low mark of rates in the industry to the economic problems that are brought up by the pandemic. Again, businesses have been formulating different strategies to maintain business continuity. One of these changes comes in the form of laying off workers to cut down on monthly expenditure. The fact that workers are having a hard time finding work means less money in circulation to the public.
This means that many property management businesses will need to have a record-low mark of 3% so that the general population would still be able to pay off much of their rent or mortgage.
What Will Rates Look Like In 2021?
Well, many experts would say that there’s going to be an uptick in the rates. The majority of the forecasts would say that many of these rates would increase by more than 0.5% above 3%. Although this might not seem like much, it’s important to note that this will continue increasing, depending on the ebb and flow of the market.
Most would also say that the mortgage rates will continue to rise, especially when businesses start re-opening to help bounce back the national and global economy. But even though rates will increase, having a rise of only half a percentage could be inconsequential for most homeowners. In some cases, the “growing” economy will only rise by 3.1%, which is lower than expected.
Although a jump by a decimal in percentage doesn’t seem like the most ground-breaking thing in the market, it’s important to remember that some properties can cost millions of dollars. This could add up to hundreds of dollars of mortgage payments. This will ultimately result in additional thousands of dollars in total ban cost.
Fortunately, you don’t have to keep on guessing when comparing and knowing mortgage rates in your area. Some businesses can help you compare mortgage rates in your area through user-friendly tools. Not only does this business help formulate better solutions, but they are also known for giving the best customer service in the industry.
According to studies from the Mortgage Bankers Association, 2021 will end with a gradual increase of 3.2%. Then by 2022, the rates will then peak at around 3.6%. Some of the trends would suggest that higher rates would entail that there will be reduced buying power.
Now that we are at the tail-end of the pandemic, many businesses and industries have been working hard to help the economy bounce back and bring everything back to “normal.” Still, it’s important to remember that the market can go both ways, which will ultimately be dependent on various factors. Is the future set in stone? Only time will tell.