How Rising Prices Could Affect the 2021 Home Market

Christy Murdock Edgar

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Unprecedented doesn’t begin to describe the last year and there seems to be no end in sight to the impact that COVID continues to have on real estate markets throughout the US and around the world. As home prices continue to rise, it is essential to think about the implications of these financial shifts on the intentions and behaviors of buyers and sellers in your market.


woman standing with clipboard next to for sale signHow to shift your messaging for the 2021 real estate market

As prices continue to rise going into what is expected to be a hot spring market, it is important to ensure that your marketing and messaging speaks to current market trends and statistics. Whether you’re providing market reports to your current sphere or advising potential clients on buying and selling in your area, it’s important to offer relevant information and insights.

In addition, as you market your services and the homes you represent, you’ll need to be able to provide reassurance and answer the questions that buyers and sellers are asking right now, including:

  • Is now the right time to buy or sell a home?
  • Where will prices go from here?
  • Why are you the right real estate agent for me?

By understanding the impact of rising prices you can better prepare to answer these questions and guide your clients effectively through their transactions. Here are some of the implications of the current market conditions and how to talk about them with your clients.


Emphasize the offset provided by record-low interest rates

While buyers may feel frustrated by home prices that are rising out of reach, they need to focus as well on the savings that historically low interest rates are poised to provide. Work with them and their lender to crunch the numbers and determine if their budget has expanded due to the continuing fall of the 30-year fixed mortgage rate.

In addition, look at the history of the market and the potential it holds for the future. While some markets may already be overpriced, others have a strong track record overall or may be experiencing new commercial and residential development that helps to explain their rising prices. That offers buyers the hope for a solid return on their homebuying investment.


side view of home with green lawn and pink shrubsWork with buyers to create alternative search strategies

If your buyers have been frustrated thus far in their home search, ever-higher sale prices may just be the last straw for their buying process. Instead, work with them to develop alternative search strategies that may let them finally find the home they want without waiting while prices continue to climb.

Perhaps they need to focus on another neighborhood or another type of home. Perhaps they’ve been unreasonably strict about their wish list. Perhaps your buyers need to shift gears and consider new construction instead of a resale property. By offering alternatives and options, you can get your buyers moving forward with confidence, even under tight market conditions.


cutout of home from grass on wooden table with toolsDig into the numbers to help buyers make better decisions

Some experts are already calling rapidly rising prices in the real estate market a bubble and comparing that bubble to the one that led to the economy-melting 2008 collapse. Whether this turns out to be true or not on a wide scale is the purview of economists and financial analysts. However, you are an expert on your local market and its movements, so dig into those numbers, look at the history of the neighborhoods and homes in your area, and become the authority on home prices in the communities you serve.

Part of your fiduciary duty to your client, and part of creating a stellar reputation in your area, comes down to the advice you provide. Be honest with your buyers and help them make smart decisions that they will feel good about for years to come. That’s how you develop friends, fans, and referral sources and how you become their real estate agent for life.


Look for bargains in short sales and bank-owned properties

According to the Mortgage Bankers Association, the number of loans in forbearance is on the rise, climbing to 5.49 percent in mid-December. With COVID-driven job losses continuing for the foreseeable future and little in the way of federal financial intervention, those numbers are poised to continue climbing, resulting in an upcoming influx of bank-owned properties and short sales in markets around the country.

This is a good time for you to talk to buyers about the possibility of purchasing one of these distressed properties. It’s also a good time to polish up your skills in this niche, perhaps through a certification like NAR’s Short Sales and Foreclosure Resource or SFR. Talk to your favorite lenders as well to find out what they are seeing and how you can effectively connect buyers with short sales in your market.


man and woman sitting shoulder to shoulderShare the good news with potential sellers

If much of your marketing is currently buyer-focused, it’s time to shift to a seller mindset. By creating marketing materials that help sellers streamline the process of listing their home and sharing the exciting things going on in your market, you’ll help provide much-needed inventory for buyers in your area and help your seller clients get top dollar for their listings.

One of the things you’ll have to help your sellers navigate is the tight buyers market they’ll face on the other side of the closing table. By helping them develop a plan that makes sense—whether they’re looking to relocate to another area or hoping to downsize or upsize locally—offering a comprehensive door-to-door strategy will provide the peace of mind they need to take advantage of today’s exceptional home valuations.

Written by Christy Murdock Edgar

Christy Murdock Edgar is a seasoned real estate writer and frequent columnist for Inman. Her expertise in the realm of real estate has helped agents all over the world improve their content marketing strategies.