2020 is over, and it was… well, an interesting year, to say the least. Not just in general either – it was one of those years for real estate that made experts walk back prior predictions and caused economists to burn more than a few of their white papers. Despite everything that happened, against all expectations, the housing market remained incredibly resistant to the issues of last year and looks to remain strong going forward. To say real estate had a benchmark year against all odds is kind of underselling it.
So what happened, and what can we expect in 2021? I’ve addressed the peculiarity of 2020 in previous blogs, but the long and short of it is that housing prices remained high because of A.) the market’s position of relative strength at the beginning of the year, B.) already-low inventories that still fell short of demand, and C.) low interest rates and a softer-than-expected economic blow from the pandemic. For us in New Smyrna Beach, we also have the constant flow of Orlando buyers and sellers already owning or wanting property here, not to mention the fact that the pandemic has increased demand for the beach, water, and boating lifestyle.
All of that added up to a resilient market and a strong floor on prices. As the pandemic looks to be drawing to a close, what are the predictions for this year?
For starters, 2020 is going to echo into 2021. What I mean by that is nothing in real estate occurs in vacuum; to a certain extent, all of this is connected, and what happened last quarter affects the next three months. So the three factors I mentioned earlier are going to have an effect on what we see moving forward.
If you’re selling, that’s good news. The reality is that there are far more buyers than there are homes available, and that was only exacerbated by the pandemic. I know that sounds counterintuitive because we’d ordinarily expect economic hardship to have the opposite effect, but while the pandemic didn’t have much of an effect on buyers searching for homes, what it did do is put occasional halts to construction, sometimes for months. This means that the balance of buyers to sellers remained largely unchanged; if anything, the supply is a lot lower relative to demand.
Because of this, prices remain high and we’re definitely in a market that favors sellers. But what if you’re looking to buy? Are conditions against you? Not necessarily. The reason I say this is due to another factor that increased the number of buyers entering the market, which has in turn increased competition: low interest rates. I’ve written about this before as well, but when interest rates fall, mortgages become more affordable and more buyers find themselves in a position to buy homes. While this increases competition, it also makes conditions a lot more favorable for first-time buyers in particular.
This means that while buyers may have to go through several offers and even outright bidding wars before they find their new home, ultimately they’ll save several thousand dollars on their mortgage and build equity more quickly. Some buyers I’ve worked with were even able to buy homes that would ordinarily be out of their price range precisely because of how much they saved on their loan. A few percentage points doesn’t look like much on paper, but it amounts to thousands of dollars in savings for borrowers, and interest rates are at historic lows. Most buyers do the math and decide to enter the market.
So on a macro scale, that’s more or less what’s going on with the market as a whole, and while these factors are at play all across the United States, real estate is all about location. In other words, local markets behave differently based on – you guessed it – their location. As a real estate agent in central Florida, I’ve seen these general conditions play a role in our market while noting its own distinct behaviors.
Assuming all of the things we’ve talked about so far still apply, how does New Smyrna Beach stand out? For one, central and south Florida never really have an “off season.” For a large part of the country, sales slow down in the cooler months after peaking in the summer. For us here in Florida – especially on the coasts – condos and tourism tend to keep the market hot year-round. Because of retirees looking for their “golden years” home, vacationers looking to rent beach houses and condos, and snowbirds from up north buying their winter getaways, New Smyrna Beach is constantly active in terms of real estate.
Unsurprisingly, this also means New Smyrna Beach has a healthy tourism market, and because of this, investment is ramping up. Some of you who follow me on social media have noticed an uptick in the price of commercial properties recently, and that’s not a coincidence. The people that are already heavily invested in New Smyrna continue to do so by way of selling to purchase a larger condo or home because they are now accelerating their future plans or spending much more time here as the pandemic shifts habits. For some, these shifts are permanent and have had an enormous effect on the market here.
With heavy demand for both rental and purchased property, commercial interests have been taking note and investing heavily in Florida over the past few years, the pandemic notwithstanding. Tourists and vacationers mean money spent in everything from bars to chartered fishing, while residents appreciate their usual favorite brunch spot. And how are you supposed to go kayaking without the proper equipment? All of this adds up to businesses setting up shop and a lot of money being poured into New Smyrna Beach from both retail and commercial sources, and neither shows signs of letting up any time soon.
Thinking of buying or selling this year? Let me know how I can help! As an agent in New Smyrna Beach for the past ten years, I know this city inside and out and can get your home sold or help you find your next one! You can find me on Instagram, or email me here!
Matt Guarro is a REALTOR in the New Smyrna Beach, Edgewater, and Port Orange areas of Central Florida.