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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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2316 Gallatin Green Boulevard 17, Bozeman, Montana 59718

2316 Gallatin Green Boulevard 17, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
1,530Sqft
Beautiful 3 bed 2.5 bath 1530 square foot condo with an attached 2 car garage. This unit features gray cabinets, white hard surface countertops, stainless steel appliances for a great modern feel. Wonderful location close to walking trails, parks, gym, Costco, Target, etc. 3rd bedroom does not have a closet but seller with work with buyer and show them options. AC is an available upgrade.
$445,000

2316 Gallatin Green Boulevard 16, Bozeman, Montana 59718

2316 Gallatin Green Boulevard 16, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
1,581Sqft
Great modern condo in a prime Bozeman location. Condo is 3 bed 2.5 bath with 1580 square feet with a two car attached garage. Property features gray cabinets, white hard surface countertops, and stainless steel appliances. This is the only unit in the complex that has a bedroom on the main floor. It sits on the south corner with great natural light.
$449,000

3271 Warbler Way A, Bozeman, Montana 59718

3271 Warbler Way A, Bozeman, Montana 59718

3Bedroom(s)
1Bathroom(s)
2,614Sqft
Introducing Skyline Vista, a luxury condo community located on the park in Cattail Creek. With over 2600 +/- sq. feet of living space these 3 bedroom condos live large with a long list of premium upgrades. First floor family room provides a great multi purpose room or office.
$775,000

TBD E Peach Street 12, Bozeman, Montana 59715

TBD E Peach Street 12, Bozeman, Montana 59715

3Bedroom(s)
2Bathroom(s)
2,500Sqft
Wildlands is a celebration of mountain modern architecture and design, nestled into one of the most authentic and vibrant neighborhoods in Bozeman, Montana. With an exceptional wrap-around covered deck, enjoy your oasis at Wildlands.
$2,750,000

289 Heights Circle, Bozeman, Montana 59718

289 Heights Circle, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
0.61Acre
2,011Sqft
Custom Home with Additional Income Apartment and a Separate Office Space on .61-acres across from a 5-acre park! This home, built by Dan Jones, has a vaulted ceiling with alder stained trim and door package. The extra-large kitchen has quartz countertops, ceramic tile backsplash, and stainless-steel appliances. The living room features large windows and a beautiful rock fireplace.
$990,000

2938 Warbler Way 16, Bozeman, Montana 59718

2938 Warbler Way 16, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
1,392Sqft
Elkhorn Condos are designed by Locati Architects. This is an end-unit 3 bedroom condo located near shopping and public transportation, trails, ponds, playgrounds. All bedrooms are located upstairs. There is a one-car attached garage. The main level includes a galley kitchen that opens to the dining and living room.
$445,000

102 N Chouteau Avenue, Bozeman, Montana 59718

102 N Chouteau Avenue, Bozeman, Montana 59718

3Bedroom(s)
2Bathroom(s)
0.23Acre
1,920Sqft
This home is calling you! It's centrally located with great access to all things 'Bozeman'. This is where neighbors come over for a 'backyard movie night' and sidewalks are filled with chalk drawings and people chatting. The outside has very nice curb appeal. The lot has plenty of mature trees and garden boxes. AND, how about your own water well for lawn and garden irrigation.
$699,000

TBD E Peach Street 1, Bozeman, Montana 59715

TBD E Peach Street 1, Bozeman, Montana 59715

2Bedroom(s)
2Bathroom(s)
2,172Sqft
Wildlands is a celebration of mountain modern architecture and design, nestled into one of the most authentic and vibrant neighborhoods in Bozeman, Montana. This 2 bedroom, 2.5 bathroom western facing loft unit features natural light from a skylight that spans the office and flex room. Enjoy 12 ft. ceilings with exposed steel rafter giving you some urban character.
$2,325,000

3124 Augusta Drive, Bozeman, Montana 59715

3124 Augusta Drive, Bozeman, Montana 59715

3Bedroom(s)
2Bathroom(s)
0.25Acre
1,948Sqft
Located between downtown and the Bridger Mountains across the street from the Bridger Creek golf course, this single level home backing up to open space boasts an open floor plan and vaulted ceilings. The spacious living room features a gas fireplace and large slider out to your back deck to enjoy the views.
$850,000
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