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Predictions for 2021 Economy and Real Estate Market

by Liz Nitz

Predictions for 2021 Economy and Real Estate Market

Matthew Gardner, the Windermere Real Estate Company, gave our company his thoughts on the Economy and the Real Estate Market this week.  The summary of his talk is below:

  1. Currently the economy is declining a bit and as expected due to Covid. We have recently seen declining jobs numbers which funnels to declining spending.  However, Matthew predicts that once the vaccine really hits some large numbers of distribution, we will see people heading back to work and spending will then increase. Both increased jobs and spending are good things for our economy overall.
  2. The move from larger cities to the suburbs and smaller cities is real. However, Matthew does think that once the vaccine has been distributed that many workers will only part time work from home and then also part time go into the office.  For this reason, he sees many people not moving too far away from their primary place of employment.
  3. In the apartment market, we will see declining rents in the larger cities as people leave the city and as they can afford to purchase homes outside of the cities. Also, the larger cities may be a bit overbuilt this year as 400,000 new units are supposed to come on line.  Developers will probably turn their attention to building in smaller cities as a result.
  4. Luxury housing performed incredibly and surprisingly well this past year. This segment is expected to do well again in 2021.  Reasons are that jumbo interest are very low and with the increased flexibility of work locale, people can choose to get more value and also move to locations with lower tax rates.  Matthew also thinks we will have more foreign buyers in 2021.
  5. Zoning overall will see more commitment to increased land being sold to developers who will build affordable housing. Many cities and town are facing a pretty substantial decrease in tax revenue and they cannot allow employers to leave because workers can’t afford housing.
  6. Adaptive reuse will gain some traction particularly in hotels, malls and strip malls being converted to residential or mixed-use developments. Matthew thinks that office buildings are tougher to reuse due to core construction and the difficulty of dealing with additional infrastructure such as plumbing needed for residential.
  7. Home features that are now important in the post Covid world – more space, separate offices, dedicated zoom space, high speed internet. As a result, new home sizes will be growing.
  8. Mortgage forebearances. These are not going to turn into foreclosures at a super high rate.  Many (maybe most) people will have enough equity in their homes that they can sell if they have to and keep their equity. In some markets, particularly larger cities, the condo market may be the exception to this.
  9. Mortgage rates are incredibly low right now. We have had 16 record lows over the past year.  Matthew thinks that they are about as low as they are going to get and as 2021 wears on, they will rise but conventional rates shouldn’t go much higher than 3.1%.
  10. In 2021, Matthew sees home sales continuing to increase (about 7.5% is his prediction) but home prices will increase 4.1%. He thinks we will have more inventory which will help to keep prices from skyrocketing.  He sees a large amount of first time home buyers entering the market, particularly if Biden is successful in passing the first time home buyer credit as part of his economic package.

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Windermere is very fortunate to have a full time, renowned economist on staff.  Matthew is often asked his opinions from economic and government leaders.  I trust his words.

If you’d like more information or to discuss further, please reach out to me at 406 499 4218 or liz@windermere.com.

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The following homes listed below were just listed in the last 7 days. This seller’s market is hot so we keep a close eye on the latest inventory. Subscribe below for instant updates of your ideal criteria.

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2000 Goose Ridge, Bozeman, Montana 59715

2000 Goose Ridge, Bozeman, Montana 59715

2Bedroom(s)
2Bathroom(s)
20.94Acre
1,971Sqft
Amongst the trees atop Goose Ridge you’ll find this beautiful mountain property. Built in 2001 on over 20 acres this 1,971 sq ft 2 bedroom, 2 bath log home is both comfortable and spacious. A partially covered wraparound deck steps down to an outdoor fire pit. The great room offers a lovely venue to take in expansive Absaroka views.
$845,000

27 Noble Peak Drive, Bozeman, Montana 59718

27 Noble Peak Drive, Bozeman, Montana 59718

4Bedroom(s)
2Bathroom(s)
0.26Acre
2,152Sqft
Beautiful 2020 built farmhouse in a quiet location in sought-after Woodland Park. Enjoy the rural and mountain views from the 11,000+ sqft lot that is fully fenced, sprinklered, and landscaped. The home is light, bright, and elegantly appointed in every detail. The open concept floor plan allows a nice flow between living spaces and access to several outdoor areas.
$779,000

2440 Tschache Lane 302, Bozeman, Montana 59715

2440 Tschache Lane 302, Bozeman, Montana 59715

2Bedroom(s)
1Bathroom(s)
1,063Sqft
These homes have modern finishes and open floor plans. The site is surrounded on 3 sides by a city park and open space, allowing for awe-inspiring views in nearly every direction. All of this from a central location within walking distance from shopping, restaurants, and retail. Start your day with Starbucks coffee (only a block or so away).
$460,000

333 New Ventures Drive, Bozeman, Montana 59718

333 New Ventures Drive, Bozeman, Montana 59718

2Bedroom(s)
1Bathroom(s)
0.81Acre
1,088Sqft
Many opportunities on this Four Corners Commercial Zoned Property! The property is currently laid out to feature (3) rentals for either short and/or long term. The 1st structure is a custom crafted cottage with many details throughout with super efficiency, charm & functionality.
$925,000

404 Fieldstone Drive, Bozeman, Montana 59715

404 Fieldstone Drive, Bozeman, Montana 59715

4Bedroom(s)
2Bathroom(s)
0.24Acre
2,134Sqft
Are you looking for more than just a tract home? Do you recall as a child riding your bike down tree-lined streets in a quiet, safe neighborhood? How about the Ice Cream truck driving down the street bringing all your friends outside for a frozen treat? Well, we can't turn back the hands of time, but we have the next best thing.
$675,000

5443 Vahl Way, Bozeman, Montana 59718

5443 Vahl Way, Bozeman, Montana 59718

4Bedroom(s)
1Bathroom(s)
0.12Acre
2,924Sqft
Spectacular setting, home, and neighborhood. This 2019 Parade of Home's entry allowed no detail to be overlooked. Custom additions on this home will provide so much enjoyment and value to the lucky new owner. From the office at the front entry of the home, which showcases one of the lakes, to the spacious great room, kitchen and dining combination; the views abound.
$1,049,900

3024 S 31st Avenue, Bozeman, Montana 59718

3024 S 31st Avenue, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
0.10Acre
2,128Sqft
Encounter Gran Cielo, Bozeman’s newest neighborhood. Where contemporary design meets classic community. Located in the heart of all that Bozeman offers, with easy access to everything. The Lagom N1 is 2,128 sq ft, offering 2 living areas, 3 bedrooms, 2.5 bathrooms with office space.
$775,000

1802 W Lincoln Street 13, Bozeman, Montana 59715

1802 W Lincoln Street 13, Bozeman, Montana 59715

3Bedroom(s)
1Bathroom(s)
1,349Sqft
Beautifully remodeled 3 BR, 1.5 BA townhouse-style condo adjacent to Montana State University. Stunning kitchen renovation with all new black stainless appliances, new counters, new soft-close cabinets, new tile flooring, new canned LED lighting and a massive pantry with a custom alder sliding barn door.
$407,000

3127 Spring Ridge Drive, Bozeman, Montana 59715

3127 Spring Ridge Drive, Bozeman, Montana 59715

3Bedroom(s)
2Bathroom(s)
0.11Acre
1,697Sqft
Welcome to this beautiful home nestled in the coveted Alder Creek Subdivision.  No detail was missed in this pristine craftsman style home. The open concept provides a generous amount of natural light and easy flow throughout this 3 bedroom, 2 bathroom single level design.
$650,000
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Bozeman, MT 59715

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