What is the Outlook for the 2021 Real Estate Market?

Several factors go into predicting real estate trends. The continuing COVID-19 pandemic, and individual financial concerns will continue to affect the market in 2021. When COVID began, home sales dropped while many listings were pulled from the market altogether due to the uncertainty. Any seller who remained on the market was considered motivated, thus giving buyers a brief upper hand. However, the tides are shifting. 

Let’s take a look at some current data as of December 2020 according to Realtor.com:

Median List Price – $430,050, which is up 15% year over year

Days on Market – 45 days, which is down 52% year over year

Active Listings – 179, a figure which is down 52% year over year


Mortgage rates will decrease. 

This decrease is in response to geopolitical uncertainty and a slowdown in the global economy. This means a potential increase in competition for affordable properties. This decrease could potentially entice new home buyers and also make it more affordable to finance new rental property purchases.


2021 Forecast for Key Housing Indicators (Realtor.com)

Housing Indicator 2021 Forecast

Mortgage Rates Average 3.2% throughout the year

Existing Home Median Sales Price Up 5.7%

Existing Home Sales Up 7.0%

Single-Family Home Housing Starts Up 9%

Homeownership Rate 65.9%


Rent growth has been at a standstill in 2020 but is likely to increase in 2021 

We expect a rental market resurgence in 2021, with rents increasing, concessions offered by landlords fading and demand for rental housing strengthening.  The rental market softened in 2020, with rents effectively unchanged nationwide from January 2020.  According to Zillow Data, in large metropolitan areas like New York, Boston, and San Francisco, rents for the typical renter actually dropped for the first time in recent memory.  COVID-driven anxiety about living in large, multifamily housing properties in dense urban centers was a primary driver of the rental market softening, but we expect this trend to reverse in 2021.  With a vaccine on the horizon and Gen Z continuing to graduate from college, we expect the cloud of uncertainty to lift and demand for rental units to surge. 

Almost 12 million renters will owe an average of $5,850 in back rent by January 2021, according to Moody’s Analytics.  If landlords allowed renters to repay that debt interest free over a period of 3 years by increasing monthly rents, these 12 million renters would pay an additional $162.50 in rent each month.  Typical renters paid $1,728 in rent in November 2020, according to the Zillow Observed Rental Index (ZORI).  Increasing rents by $162.50 would represent a 9.4% increase for the typical renter. 

Another effect on rents in California is AB1482/ Rent Cap Just Cause is recent legislation governing rental properties. The main points are that it sets a maximum yearly rental increase for applicable properties at 5% plus inflation and has strict requirements for when a tenant can be given notice to move out of an applicable property. (Zillow)


Housing Data (Humboldt Census)

Housing units, July 1, 2019, (V2019) 63,727

Owner-occupied housing unit rate, 2015-2019 56.8%

Median selected monthly owner costs -with a mortgage, 2015-2019 $1,742

Median selected monthly owner costs -without a mortgage, 2015-2019 $464

Median gross rent, 2015-2019 $981

Building permits, 2019 387


Vacancies will be easy to fill. 

Eviction moratoriums are creating inflated occupancy rates. State-imposed eviction moratoriums have allowed tenants to stay in their rentals for nearly a year now, whether or not they are paying the rent. This is helpful for renters struggling with income loss, but definitely a disruption of the natural eviction cycle. Units that would historically become available if a tenant could no longer afford the rent are now remaining occupied, having a cascading effect that lowers vacancy rates dramatically. Even the most qualified renters are struggling to find vacant rentals. (Forbes)

These final two predictions are good news for investors looking to enter the market, or those looking to purchase additional rental properties. Although obtaining bargain rental properties will be difficult, the outlook for strong rental demand and the potential for raising rents in 2021 make single family rentals an attractive long-term investment. This could ultimately benefit renters too, as more investment flows into rental housing housing, there will be more non-owner occupied homes increasing the supply of homes available to renters, which would be a real benefit in our area which has an increasingly high demand for rental housing, and simply not enough to house everyone in need.


Vacancy rates in Humboldt and nationally are in decline.  

According to the US census Bureau reports national vacancy rates in the third quarter 2020 were 6.4% for rental housing which is a decrease from the rate in the third quarter 2019 (6.8%) and 0.7% higher than the rate in the second quarter 2020 (5.7%)  (US Census 2020).  Based on the figures for our portfolio, which is approximately 3.9% of the rental market in Humboldt, we are seeing occupancy at 98.7 and delinquency at 1.3%, which may or may not accurately reflect the broader rental market, but may indicate general trends. We know many Residents do not want to fall behind on payments and even when delinquent, appear to be applying for aid or making payment plans to get things back on track. We are pleased to see that our market rates are not dramatically increasing, adversely affecting the residents in our community; our local market rents are at an average of $875 for a 2 bedroom, 1 bathroom unit and $1,475 for a 3 bedroom, 2 bathroom unit. This is all fantastic news, as this means landlords are getting people housed quicker and it is a positive trend for investors considering purchasing rental properties in this area. For monthly updates on rental market rates in our area, check out our Monthly Rental Market Snapshot.


Low inventory levels will create a more competitive market. 

The lower-than-expected number of new builds in 2020 has economists predicting this under-producing trend to continue into 2021. At the same time, professional investors have taken notice of the stability of the single-family rental home market, creating an influx of new rental property owners. These conditions and more will create limited inventory conditions in 2021 and make for a more competitive real estate market. 


When moratoriums are lifted, the rental market will change.

Given the current state of the pandemic in the United States, it’s likely that eviction moratoriums will continue to be extended. With a state law protecting California tenants from pandemic-related evictions expiring at the end of this month, Gov. Gavin Newsom proposed January 6th to extend the protections and expedite distribution of $2.6 billion in federal rental assistance for low-income tenants. As eviction moratoriums continue and vacancy rates remain dismally low, the lack of supply coupled with high demand will cause both rental rates and home prices to continue to climb.

When eviction moratoriums are lifted and landlords begin to pursue eviction for nonpayment of rent, it’s not unlikely that we will see a housing market crash. Tenants who have been unable to pay rent may be thousands of dollars in debt to their landlords, who themselves may have been forced to defer or default on their mortgage payments. The rental market could be flooded with vacancies as supply reenters the market, which means property values and rental rates could drop overnight. All of these factors could contribute to a drastic housing market crash.  (Forbes) 


2021 TRENDS: Remote Work

The ability to work from home is not new. In fact, as long ago as 2018, roughly one-quarter of workers worked at home, up from just 15 percent in 2001. More recently, a scan of real estate listings on realtor.com in early 2020 showed that in the ten metro markets where they are most common, as many as 1-in-5 to 1-in-3 home listings mentioned an “office.” Remote working was already more common among home shoppers than the general working population, with more than one-third of home shoppers reporting that they worked remotely even before the coronavirus. Additionally, remote working has gained an unprecedented prominence in response to stay-at-home orders and continued measures to quell the spread of the coronavirus. Another 37 percent of home shoppers reported working remotely as a result of the coronavirus. While a majority of home shoppers reported a preference for working remotely, three-quarters of workers expect to return to the office at least part-time at some point in the future. However, the ability to work remotely was a factor prompting a majority of respondents to buy a home in 2020. This was the case even when most expected to return to offices sometime in 2020. As remote work extends into 2021 and in some cases employers grant employees the flexibility to continue remote work indefinitely, expect home listings to showcase features that support remote work such as home offices, zoom rooms, high-speed internet connections, quiet yards that facilitate outdoor office work, and proximity to coffee shops and other businesses that offer back-up internet and a break from being at home, which can feel monotonous to some, to become more prevalent


2021 TRENDS: Suburban Migration

With remote work becoming much more common, home shopping in suburban areas had a stronger post-COVID lockdown bounceback than shopping in urban areas, starting in the spring and continuing through the summer. These trends, which have been visible in rental data as well, suggest that city-dwellers—freed from the daily tether of a commute to the office and looking for affordable space to shelter, work, learn, and live—were finding the answer in the suburbs. In fact, a summer survey of home shoppers showed that while a majority of respondents reported no change in their willingness to commute, among those who did report a change, three of every four reported an increased willingness to commute or live further from the office.

Even before the pandemic, homebuyers looking for affordability were finding it in areas outside of urban cores. The pandemic has merely accelerated this previous trend by giving homebuyers additional reasons to move farther from downtown.




What does this mean for Investors? A low vacancy rate is a reliable indicator of a competitive rental market. This is generally beneficial to Investors who are looking to lease their property with minimal vacancy loss.  This decreased vacancy loss may spur demand for the development of more housing.


What does this mean for renters?  A decrease in vacancy rates could increase confidence in investing in properties as rentals. If there is a substantial increase in investment, and thus a larger supply of properties available, demand and thus prices would continue their market cycle. Regardless of market conditions, Real Property Management Humboldt will continue proudly serving Property Owners and Residents with their rental needs. 


Our Mission at RPM is to improve lives and our community by continuously elevating property management standards. By conducting research and preparing real estate market predictions, Real Property Management is investing in the education and success of both Property Owners & Residents of our community. We hope to not only provide the data but answer any questions you may have about rental housing in our area, please don’t hesitate to reach out with any questions or suggestions.



About Real Property Management Humboldt

At Real Property Management Humboldt in Eureka CA, we proudly stand behind our reputation as a locally preferred property management company.  With over 35 years in business & decades of experience, we are the trusted leader in property management.

Your Real Property Management team consists of highly-trained experts in every aspect of property management -we have multiple licensed REALTORS that know how to handle the difficult challenges of property management. We value our ability to be responsive to the needs of both owners and tenants. With backups to backups and thoroughly developed systems in place, we keep things simple, timely, personal & accurate. For the best property management from anywhere between Trinidad and Rio Dell, Real Property Management Humboldt provides the details, management, and insight on your properties that you need to be a successful investor. For more information regarding Real Property Management Humboldt or the services we provide, visit RealPM.com

About US Census Bureau

The Census Bureau’s mission is to serve as the leading source of quality data about the nation’s people and economy. We honor privacy, protect confidentiality, share our expertise globally, and conduct our work openly. We are guided on this mission by scientific objectivity, our strong and capable workforce, our devotion to research-based innovation, and our abiding commitment to our customers. The Census Bureau operates under Title 13 and Title 26 of the U.S. Code. Our goal is to provide the best mix of timeliness, relevancy, quality, and cost for the data we collect and services we provide.

Their reports are here: 



About HUD or the US Department of Housing and Urban Development

Hud works to ensure & with issues pertaining to Affordable housing · Community development · Design technology · Economic development · Fairhousing/fair lending · FHA outlook reports · Homelessness · Homeownership · Housing finance ·Housing for special needs · HUD research (HUD User) · Manufactured housing · Market characteristics · Periodicals from HUD. The Office of Policy Development and Research (PD&R) is the principal advisor to the Secretary on overall Departmental policy, program evaluations, demonstrations, and research, and is responsible for providing economic information and analyses of housing and community development statistics and other data.

About Realtor.com

For years, millions of home shoppers have turned to realtor.com® to find their dream home. Operated by Move, Inc., realtor.com® offers a comprehensive list of for-sale properties, as well as the information and tools to make informed real estate decisions. Today, more than ever, realtor.com® is The Home of Home Search℠.

Realtor.com® also offers homeowners a bevy of useful tools and resources through the My Home℠ dashboard. My Home℠ dashboard allows property owners to manage their home like the important investment it is by tracking their home’s value over time, researching and managing home improvements, and scouting other similar properties in the neighborhood.


About Zillow

Zillow Research aims to be the most open, authoritative source for timely and accurate housing data and unbiased insight. Our goal is to empower consumers, industry professionals, policymakers and researchers to better understand the housing market. Zillow Research provides unbiased data and analysis about the housing market in a transparent way. Whenever possible, the team makes co de and underlying data available so work can be replicated independently. Methodology is always clearly explained. Zillow Research is independent of Zillow’s business goals, and is not a revenue center. Zillow Research is open about how data sources and data quality impact research, and is transparent about potential issues with data used. Zillow Research benchmarks findings against outside datasets whenever possible to ensure accuracy and appropriate context. Zillow Research respects the integrity of data and uses it honestly, and never manipulates data to create a desired result. We are data- and fact-driven.



About Forbes

Forbes is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features original articles on finance, industry, investing, and marketing topics. Forbes also reports on related subjects such as technology, communications, science, politics, and law. Its headquarters is located in Jersey City, New Jersey. Forbes has an international edition in Asia as well as editions produced under license in 27 countries and regions worldwide.