Real Estate Market Forecast For 2021

his report will begin with a summary of what transpired in 2020 and then will conclude with a forecast for home sales in 2021The housing market in 2020 performed as expected, despite a global pandemic that slowed Summer sales. The Fed's move to drop interest rates restored demand, and by the end of the year, the market was up a solid 2% over the previous year.

As we start the 2021 year, the housing market continues to have interest-rate fueled heightened demand, but historic-low inventory levels. This report will begin with a summary of what transpired in 2020 and then will conclude with a forecast for home sales in 2021.

So just how hot is the demand in the market? Check out the following list of all the homes for sale in Tallahassee and you will find that nearly one-half of them are already under contract with buyers.

Listings In The Tallahassee Real Estate Market

881 Properties
Page 1 of 74

VIDEO Housing Market Forecast For 2021

2020 - The Fourth Most-Active Year For Home Sales

So how good was 2020 for home sellers? The graph below shows that 2020 trailed only the booming years from 2004 through 2006 for the number of homes sold.

Annual Home Sales Graph

This graph plots the number of homes sold each year in the Tallahassee MLS from 2002 through 2020.

Graph displaying annual home sales in the Tallahassee real estate market

Despite the fear and uncertainty generated by a global pandemic, the housing market managed to rise more than 2% in 2020.

The Year Finished Strong - Demand Remains High

Just as we forecast back in April (with a nod to Ron Rice who first voiced this expectation back in March 2020), the buyers who opted out in the Spring and early Summer came back to the market in the fourth quarter.

buyers who opted out in the Spring and early Summer came back to the market in the fourth quarter

This graph shows how each month's sales compared with the same month the year prior. We refer to this as the year-over-year home sales report. Year over year home sales comparisons provides insight into the market changes by removing the seasonal changes in the market.

Year over year home sales rose more than 13% in December, registering the fourth-straight month of gains and a growth streak in five out of the past six months.

The past two graphs help us understand the demand-side of the housing market, and it is apparent that demand is sky-high.

If there were more homes listed for sale, we would have seen even more sales. Right now, the supply-side of the housing market is slowing sales.

Supply Of Homes Is Too Low

Before we examine the current state of supply and demand in the housing market, let's take a quick look at the inventory that entered the market in 2020 and in previous years.

Graph shows new listings entering the market over the past 7 years

This graph counts the number of fresh existing homes entering the market. The term "fresh" is used to identify these homes as new to the market, not having been recently listed prior, and "existing" refers to the fact that we have omitted new home construction from this graph.

The number of fresh listings entering the market declined by 7% in 2020, even though sales rose. Remember, more than one-half of all homebuyers in Tallahassee have a home to sell when they move, so we expect a rise in sales to result in a rise of listings too. That was not the case.

I believe there were several hundred sellers who opted out of the market in 2020 who will be listing their homes early this year. We very well could have a strong run on existing inventory streaming into the market any time now.

But existing homes are only part of the market, we also need to look at what the builders have been providing.

New Construction Is Heating Up

Much like the previous graph which showed fresh listings on the resale side of the housing market, this next graph shows new construction listings entering the market.

look at what the builders have been providing

New construction was up 44% in 2020, helping to bring much-needed inventory to the market. But was it enough?

Record-Low Months Of Supply

The relative supply is the supply of homes for sale relative to the current rate of demand and it’s measured in months of supply.

This table shows the non-seasonal relative supply of homes for sale.

table shows the non-seasonal relative supply of homes for sale

Summarizing Current Market Conditions

The previous graphs showed that demand is up and supply is down, so we have a market where prices and values are moving higher at an extreme rate of progression.

Where does this leave us for 2021?

My forecast for 2021 continues down below.

Please Do Us A Small Favor

We work very hard to produce daily content for our long-time readers and first-time visitors. We provide this information for free, hoping to earn your respect and trust and the right to one-day help you when selling or buying a home. Can we get your help spreading the word about our blog?

If you like the content, would you please like it or share it using the Facebook button at the beginning of the post? This simple action will be greatly appreciated! THANK YOU!

Please Like Us And Share On Facebook - Help us grow our brand!

Also like us on Facebook at https://www.facebook.com/joemanausarealestate/

Conflicting Market Forces Impact 2021 Housing Forecast

The big variables for the housing market in 2021 include the impact of the pandemic on jobs, the change in mortgage interest rates, and the influx of new listings of homes for sale.

It seems like everybody has an opinion on how well the pandemic is being managed and what we should expect in 2021. Unfortunately, this falls outside of my expertise, but my opinion is that we'll be dealing with COVID far beyond 2021. It will have an impact on our economy and that means jobs for many industries will continue to be at risk for the foreseeable future.

The big headlines on Youtube (for real estate anyway) claim a housing-bust will happen in 2021, but I think the majority of these reports stem from video-creators seeking viewers, not so much from factual, evidence-based reporting.

Anybody who uses 2006 as a reference to current market conditions does not study supply and demand and therefore is likely to miss the boat completely.

Forecasting The 2021 Housing Market

I have posted real estate market forecasts each year for the Tallahassee real estate market going back to 2007. Generally speaking, I have been spot-on in these looks into the crystal ball. But 2021 is different.

2021 is the most difficult forecast that I have prepared, as the variables that will determine its fate are far more volatile than they have been in the past. In order to help provide clarity on this point, I will address each of these variables and then conclude with my forecast for 2021.

Mortgage Interest Rates Are At Historical Lows

This next graph shows just how low current mortgage rates have dropped, and I'll explain exactly what that does to the housing market.

graph shows just how low current mortgage rates have dropped

More than 50 years of monthly mortgage interest rates are plotted in blue above, and this is a perfect example of where a picture is worth a thousand words! The yellow dash line shows today's current rate, while the solid yellow line shows the 50-year average.

Today's rates are so low that home affordability has improved, even during the huge price and value growth observed in the market. So how does this impact our forecast?

I believe our fallen economy needed the Fed to keep interest rates low to help businesses recover from the impact of the pandemic. I also believe this will be the case in 2021 and likely 2022 as well.

I also believe that mortgage interest rates will generally follow the Fed's move on the Federal Funds Rate, meaning if the Fed cuts rates, mortgage interest rates will fall.

With that being said, I find it hard to believe we will see mortgage interest rates rise substantially over the year or so. If I were to have to bet, I would expect more rate cuts at least through mid-2021.

So low mortgage interest rates which are currently fueling heightened demand in the housing market are not likely going away any time soon. When I make my forecast for 2021, it will be done assuming rates stay below 3.25% for all of 2021.

Inventory Is Scarce - We Need More Homes

There are not enough homes for sale in Tallahassee (and most other US housing markets), we need more sellers to enter the market.

Relative Supply Of Homes For Sale - Graphed To Show Shortages

This graph shows the average number of listings in each price range (red), the average monthly number of sales (green), and then plots the relative supply of homes for sale (blue).

The middle of the market is the hottest and it is where more homes are most needed. I have the middle outlined in blue above, and with its price being south of $250K, this creates a big problem.

Builders cannot deliver $250K homes to the market, they are struggling to stay below $300K right now. Yet this is what the market needs!

The big challenge for builders will be to deliver the inventory the market needs at prices the market can afford.

Additionally, we need to see the pent-up supply (people who chose not to sell due to the pandemic) stream back into the market as early as possible this year.

Distressed Homes Will NOT Overwhelm The Market

I have seen videos and read articles where people are projecting a housing market collapse in 2021, fueled by lost jobs and people losing their homes to foreclosure.

While this might seem like a realistic scenario if you have a good memory of the market from 2006 through 2012, today's facts make this highly unlikely. If the market is going to melt-down, there are many steps that will need to occur before any foreclosure crisis hits us.

If the market is going to melt-down, there are many steps that will need to occur before any foreclosure crisis hits us

This graph reports all home sales each year, with healthy, arms-length sales plotted in green, and distressed home sales plotted in red. Clearly, the trend shows the market improving greatly.

The black line shows the percentage of all home sales that are distressed. We saw a high of 38% back in 2012 but saw the market improve each year to a new low of 1.4% in 2020.

Unlike the market in 2008, when distressed homes were coming in and home values were plunging due to the oversupply of homes for sale, 2021 is starting from an inventory-starved position. Additionally, a lot of equity was lost from the market when foreclosures were rampant from 2010 through 2015, but today's market has equity and foreclosures will be consumed fast.

2021 Housing Market Forecast

This graph shows my forecast for home sales in the Tallahassee real estate market in 2021.

This graph shows my forecast for home sales in the Tallahassee real estate market in 2021

My forecast for home sales in 2021, as shown in the graph, is for the market to finish about 5% higher than in 2020, making it the 3rd-best year on record. A big-push by home builders could have us exceed this forecast, but I don't think it will happen.

On the other hand, the Fed could raise interest rates in order to slow inflation coming from the housing market, but I also don't think this will happen either. A slight increase in mortgage interest rates will hardly impact the market, though further large declines could push my forecast higher too.

I'll stick with 4,700 homes listed and sold in the Tallahassee MLS, and if you happen to be one of those 4,700, give us a call and let us show you why we've earned more 5-star reviews than any other company in Tallahassee. We'll work very hard to ensure that you are happy too!

Top Tips For Homebuyers

How To Buy Your First Home 2021 Step By Step
How To Buy Your First Home 2021 Step By Step
How To Buy Your First Home 2021 Step By Step - The home buying process from start to finish. Walkthrough the entire homebuying process, great for first time homebuyers and anyone buying a home in 2021. This is Home Buying 101 for 2021.
What are closing costs when buying a home?
What are closing costs when buying a home?
If you are planning to buy a home now, or in the next few months, there are some fees and expenses you’ll need to pay in addition to your down payment that you should know about. Other than your down payment, all money you spend when you buy a home are called “closing costs,” and you should know about them ahead of time. Even experienced buyers can be surprised at all the costs that are associated with buying a home today. This short video will cover what you need to know so that you can (one, be prepared,
What To Offer On A Home In A Sellers Market
What To Offer On A Home In A Sellers Market
We are experiencing the strongest seller's market on record, so you have to be prepared to make the right kind of offer if you want to buy a home today. And it's not all just about how much to offer, there is so much involved when making the "RIGHT" offer in a seller's market. I have shared my experience of selling thousands of homes in a seller's market, both with working for buyers and with working for sellers. I have shared 3 important home buying tips to enlighten you on what matters most to sellers so
Real Estate Appraisal Versus Fair Market Value Of A Home?
Real Estate Appraisal Versus Fair Market Value Of A Home?
What is the difference between a real estate appraisal and the fair market value of a home? If there is one practice that confounds both home buyers and home sellers alike it's the fact that the majority of real estate transactions close at the mercy of an appraisal conducted for a purpose that most consumers do not consider. Understanding these differences will save you money when it comes to buying or selling a home, and it will help you appreciate the need and value of a real estate appraisal. But here’s
What Is A Real Estate Hot Sheet?
What Is A Real Estate Hot Sheet?
What Is A Real Estate Hotsheet? - When agents are new to the real estate industry, they are trained to monitor the " MLS Hot Sheet" every morning in order to stay informed of the inventory changes. So what is a real estate hot sheet, and can non-Realtors get access to it? ?? Link to the current real estate Hot Sheet: https://www.TallahasseeHotSheet.com Up until now, the hot sheet was proprietary information only available to paid members of the MLS. But recognizing that inventory is so low in the Tallahass
Who is responsible for determining the value of the home you want to buy?
Who is responsible for determining the value of the home you want to buy?
If you are planning on buying a home now, or within the next three to six months, you are going to have all sorts of questions pop up for which you’ll want answers. Among the most important of these will have to do with figuring out what a home is worth. As a matter of fact, I was recently asked this question “Who is primarily responsible for determining the market value of the home you want to buy?” Questions about valuation are very common from buyers of all experience levels because nobody wants to overp
What Is The Definition Of Distressed Property?
What Is The Definition Of Distressed Property?
What Is The Definition Of Distressed Property? I received this question from "Rich" who asked: Joe, what is your definition of a "Distressed Property" - foreclosure, disrepair, time on market, location? That's a great question because we have a ton of people who have registered to receive our regularly updated list of distressed properties for sale in Tallahassee, so I know the topic is very popular today. In fact, it’s not uncommon for people just entering the market to buy a home to be focused on distress
Why Use A Buyer's Agent For New Construction?
Why Use A Buyer's Agent For New Construction?
Why Use A Buyer's Agent For New Construction? - I was recently asked about the benefits of having a buyers agent for new construction. Specifically, she asked why she should use a buyer's agent for new construction? My short answer is that you should always hire a well-trained advocate to help you buy any real estate, including new construction homes. This video though will specifically address several benefits of having your own advocate when purchasing a brand new home, whether it has already been built
What Is A Seller's Market In Real Estate?
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).
How Many Times Will A Home Seller Counter Offer?
How Many Times Will A Home Seller Counter Offer?
This real estate frequently asked question is from a recent home buyer. If you are about to buy a home in Tallahassee Florida or beyond and you’re trying to better understand how the real estate negotiation process will work, then understanding how to better control the negotiation is going to keep some of your hard-earned money in your pocket!
What You Should Know About School Zones When Buying A Home
What You Should Know About School Zones When Buying A Home
What You Should Know About School Zones When Buying A Home - Buyers always ask about school zones, even when they do not have school-aged children. They understand that homes in the highest-rated school zones often fetch the most money, so they believe they are putting themselves in the best position for a future sale by purchasing a home in an acceptable school zone today. Unfortunately, this logic is flawed. If you are buying a home with no need for a school yet plan on including your opinion of the publi

Top Tips For Home Sellers

Home Selling Tip: Don't Price Your Home On The 9s!
Home Selling Tip: Don't Price Your Home On The 9s!
One of the most important steps in your marketing strategy when selling a home is setting the initial asking price for the home. While I have discussed this in previous videos, today I’m going to discuss a technique that I refer to as pricing on the 9s. It works to reduce the buyer pool for the home seller and reduce’s the seller’s chances of getting top dollar for the home. It is a terrible tactic and works against the seller. If you watch this short video, you’ll understand exactly why it hurts home selle
Home Staging Advice For Sellers
Home Staging Advice For Sellers
Do you wonder how to net more money selling your home? This is one of my top home selling tips. Today's video is everything you need to know about staging your home in order to NET the most money from your sale. ?? Here's a link to our FREE Home Sellers Checklist mentioned in the video: https://www.tallahasseechecklist.com/home-seller-checklist-downloadzh61xghm
What Is A Seller's Market In Real Estate?
What Is A Seller's Market In Real Estate?
You might have heard that we have a huge seller’s market right now in real estate. Do you know what that means? This real estate frequently asked question comes up from time to time when somebody is buying a home or selling a home. They want to know if its a buyer’s market or a seller’s market. Is now a good time to buy a home in the Tallahassee real estate market? I have prepared this short video to demonstrate the conditions that make this a seller’s market, and then we’ll show you the numbers and how we
How Much Margin For Negotiation Should I Include In My Asking Price?
How Much Margin For Negotiation Should I Include In My Asking Price?
I was recently asked "How much margin for negotiation should I include in my asking price?" This is a common question from experienced home sellers. They have sold homes in the past and understand the negotiation process involves a game of give and take, so doesn’t it make good sense to start with a little wiggle room in your price so that you can give it to the buyer to secure a sale? Here's what you should know. I explain EXACTLY how much margin for negotiation you should add to the price of your home t
Real Estate Appraisal Versus Fair Market Value Of A Home?
Real Estate Appraisal Versus Fair Market Value Of A Home?
What is the difference between a real estate appraisal and the fair market value of a home? If there is one practice that confounds both home buyers and home sellers alike it's the fact that the majority of real estate transactions close at the mercy of an appraisal conducted for a purpose that most consumers do not consider. Understanding these differences will save you money when it comes to buying or selling a home, and it will help you appreciate the need and value of a real estate appraisal. But here’s
First Right Of Refusal Meaning Explained
First Right Of Refusal Meaning Explained
What is a right of first refusal? What does first right of refusal mean when dealing with a real estate contract? Accepting real estate contingencies without understanding them often causes home sellers problems. I have shared a real-world example of how we handled a first right of refusal real estate contract negotiation, and the decision-making process used to put the home seller in the best situation possible. Pay close attention to this short video and you’ll have a better understanding of the right to
How To Sell A Home That Needs Repairs
How To Sell A Home That Needs Repairs
How To Sell A Home That Needs Repairs - If you want to know how to sell a fixer upper house fast, then there are some fundamentals of selling a fixer-upper that you should understand. Ideally, in real estate sales, when selling a home, you should bring a house to market-condition before you sell your house fast in order to attain top dollar during the sale. But ideal situations are not always possible. If you follow the tips and advice in this video, you will know how to sell a fixer-upper house fast and in
What Is Pre Marketing In Real Estate When Selling A Home?
What Is Pre Marketing In Real Estate When Selling A Home?
What is pre-marketing in real estate when selling a home? When your home hits the market and it "goes live," how many buyers will be standing in line to get in? Will it look like an Apple store on the day the new iPhone is released? If not, why not? ... it's all in the video ??????
How Digital Has Changed How We Sell A Home Today
How Digital Has Changed How We Sell A Home Today
Time to sell a home? The digital age has had a huge impact on what homeowners must do to get top dollar when selling their home. In this video, Joe Manausa explains why and how things have changed, and then lays out the plan for what home sellers must do.
5 Ways To Handle The House In A Divorce
5 Ways To Handle The House In A Divorce
If there is one thing that I see divorcing couples doing wrong more often than not, it is the decision on how to handle the house where the couple has lived. While I am not a lawyer and I'm not dispensing legal advice, take it from somebody who has helped hundreds of divorcing couples, there is a right way (and FOUR wrong ways) to handle the house in a divorce. Tell your attorney that you want to do it right!
Ugly Real Estate Listing Pictures | Real Estate Photography Tips
Ugly Real Estate Listing Pictures | Real Estate Photography Tips
I’ve got some funny, ugly real estate listing pictures to share with you today, along with some simple real estate photography tips. Take a humorous look at some of the WORST pictures I have seen used when marketing a home ... not the way to sell your house!
How Long Does It Take To Sell A Home In 2020?
How Long Does It Take To Sell A Home In 2020?
How long does it take a home to sell in 2020? I've been asked this question a lot recently, and it made me realize a full explanation was in order. Why? Because if you understood how to sell a home for top dollar, you would know that it is a trick question. Trust me on this. Invest the few minutes it takes to watch the video and you'll have a better understanding of selling a home than do most people in the real estate industry (and I'll prove it!).
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth?
What Is A Swimming Pool Worth? Recently, a customer buying a home asked me a simple question. She inquired “how much does a pool add to the value of a home?” Pretty simple question, right? Well, by the end of this short video, you’ll know the not-so-simple answer (and why this is so important).

Recent Housing Market Reports

The Truth About The Housing Bubble Of 2021
The Truth About The Housing Bubble Of 2021
Will there be a housing bubble in 2021? - If you look at the most active real estate videos on YouTube, you'll find that the forecast for the next real estate bubble is very popular. Is there a housing crisis and will there be a housing crash in 2021? Or is it just sensationalism that drives people to watch these so-called reports? This video exposes real evidence and I will give you data that tells you everything you need to know about a housing bubble in 2021.
Luxury Home Sales Report 2020
Luxury Home Sales Report 2020
The term "luxury homes" has many meanings to different people. As with many things, "Luxury" is in the eye of the beholder. When it comes to real estate though, luxury is often defined by lifestyle, location, amenities, land size, as well as the physical size of a home. For today's luxury real estate report, we include all luxury homes priced in the top 1% of the market.
Foreclosures 2020: The Coming Coronavirus Foreclosure Crisis
Foreclosures 2020: The Coming Coronavirus Foreclosure Crisis
Is there a foreclosure crisis or is it fake news? I’m seeing a lot of videos and articles about the impending doom of the housing market. A tsunami of foreclosures? Evictions by the millions? Home prices dropping by 40%! There are a lot of doomsayers getting a lot of attention these days. Wouldn’t it be interesting to take a fact-based look at the housing market instead? Sit back, relax, and watch our Housing Market 2020 Forecast, and you'll discover the real deal about the impending foreclosure crisis in
Housing Market Report November 2020
Housing Market Report November 2020
November is over, we're through ten months of this crazy 2020 year, and I have a powerful report on the current housing market. As I have mentioned in recent real estate market reports, the Tallahassee real estate market is behaving more like we'd expect in the Summer as opposed to normal October and November conditions. I have created some graphs that I will share with you now, they accurately depict current housing market conditions and make it possible to forecast what we will see next in the Tallahassee
Year Over Year Home Sales Report November 2020
Year Over Year Home Sales Report November 2020
Year Over Year Home Sales Report November 2020 - October is over, November is upon us, and we’ve already put together our Year To Date Home Sales Report November 2020. Most companies that provide Tallahassee real estate reports take several weeks to produce something for consumers, but we’ve managed to wrap up October in just three days. This report will show you that something special happened in October, and it’s a sign of how the housing market is responding to the global pandemic. If you stick around to
Real Estate Crystal Ball | Pending Home Sales Report October 2020
Real Estate Crystal Ball | Pending Home Sales Report October 2020
My real estate crystal ball (aka the Pending Home Sales Report) will tell you what you need to know about the current real estate market as well as a forecast for the next quarter. What I will reveal is nothing like you would expect to hear during a global pandemic, so just sit back and relax, grab a cool drink, and take a look at pending home sales in the Tallahassee real estate market.
November 2020 Inventory Report
November 2020 Inventory Report
The November 2020 Inventory Report is ready to go, and the theme for November is “musical chairs.” So how does this relate to the housing market? Well, watch the video through the end. I’ll show you who the players are, what the music is, and when the hunt for chairs will come to and end.

Your Local Expert In Tallahassee

When moving to, in, or from Tallahassee, you will fare better if you work with a local expert. We are here to help. If you have further questions on the Tallahassee real estate market, you can leave a comment below, give us a call at (850) 366-8917, or drop us a note and we'll give you the local information needed to ensure a successful, smooth transaction.

As a local born and raised in Tallahassee with a focus on customer service, I promise you'll find great success when working with Joe Manausa Real Estate, just as have our past customers. You can read thousands of their reviews reported on Google, Facebook and Zillow right here: Real Estate Agent Reviews Tallahassee.

The digital marketing guide for small businessesHave you heard about my new book "The Business of Getting Business?" It's a comprehensive guide for small businesses to help them make the move to digital. For those of us who want to survive and thrive in a world where large corporations are taking over, it is a must-read. It's also the perfect guide for how to sell a home in the digital age. You can find The Business Of Getting Business by clicking on any of the trusted retailers below.

Real Estate Agent reveals in Tallahassee, Florida

Think all REALTORS are alike?

Read what people are saying about working with Joe Manausa Real Estate! You can see thousands of real customer reviews reported on Google, Facebook and Zillow at this link: CLICK HERE FOR REAL ESTATE AGENT REVIEWS.

Post a Comment

Have a Question or Want a Free Market Report?

Contact Us
Questions? We're Here to Help