January 2021 Newsletter

Some good thoughts for 2021…

In the last 100 years, do you know what year had the highest number of births in the United States?  If you guessed 2007 (which saw 4,316,233 births, according to the National Center for Health Statistics), you are correct!  If you were curious about the relevance of 2007 to the American Association of Retirement Communities…well, that’s a valid question (my daughter Laura was born in 2007, but that’s not really newsletter fodder…).

What is relevant is the year with the SECOND highest number of US births – 1961, with 4,268,326.  The folks born in that peak Baby Boomer birth year turn 60 in 2021 – and people turning 60 are shopping for retirement destinations.

Many destination communities had strong sales in 2020, driven by the pandemic and the desire for folks to get away from urban areas.  But the migration to destination communities that cater to retirees is likely to remain strong: 1961, 1960, 1957, 1959, 1958 and 1962 represent six of the highest ten birth years in American history – and the oldest of that 5-year cohort turns 64 in 2021.

How will your community attract its share (and more!) of that Baby Boomer retiree wave?  The AARC is a great conduit to learn best practices, find resources, and commiserate on strategies.  We are looking forward to a great 2021, including the resumption of our annual conference (slated for November in Myrtle Beach).  Please let your board know how we might help be an even better resource for you in the coming year!

Bill Houghton
Chair, The AARC

2021 Housing Market Predictions and Forecast

Danielle Hale, REALTOR.com | December 2, 2020

2021 National Housing Market Forecast and Predictions: Back to Normal

To say 2020 was a year of surprises is an extreme understatement. What started off as a bright year for the housing market and the economy was soon derailed by a global pandemic and severe economic recession. As detailed by my colleague, George Ratiu, the economic rebound has been sharp, but is by no means complete and created distinct winners and losers among sectors in the economy. Read more detailed thoughts on the overall economic context and outlook, here. One of the big winners has been the housing market, which saw home sales and prices hit decade-plus highs following decade lows in the span of just a few months. We expect housing’s winning streak to continue in 2021 as seasonal trends normalize and some of the frenzied momentum fades thanks to fresh affordability challenges. Below you’ll find our forecast and housing market predictions on key trends that will shape the year ahead.

Realtor.com 2021 Forecast for Key Housing Indicators

Seasonality and 2020 Context: The Baseline

In 2020, the seasonal pattern for home sales and other metrics was thrown out of whack by the timing of the coronavirus arrival as well as the shelter-at-home orders and other measures that were rolled out to arrest the spread of the virus. These measures were implemented just before what’s normally the best time of year for sellers to list a home for sale, and housing inventory never fully made up the gap as buyers returned in earnest before sellers. This uneven return of buyers and sellers created a housing market frenzy that pushed the number of sales to decade highs while time on market dropped to new lows. This trend persisted well into the fall, a time when normal seasonal trends typically favor home buyers over sellers, thus buyers hoping for the usual break in 2020 were likely disappointed. Understanding this backdrop will be key to evaluating the data as it comes in for 2021 as we expect the housing market to settle into a much more normal pattern than the wild swings we saw in 2020. Year over year trends will need to be understood in the context of the unusual 2020 base year.

Home Sales

After whipsawing in tremendous fashion in early 2020, the housing market more than regained its early-year momentum to finish at new highs for home sales in the fall. For the year, we expect 2020 home sales to register slightly higher (0.9%) than the 2019 total thanks to the strong, if delayed, buying season. Going into 2021, we expect home sales activity to slow from those frenzied levels which represented underlying housing demand as well as make-up buying for a spring season many buyers missed out on plus a sense of urgency brought on by record low mortgage rates. As sub-3 percent mortgage rates start to feel less exceptional, buyers may not react with the same immediacy to take advantage of them, initially, though as rates start to rise in the second half of 2021, buyers may feel the need to hurry purchases along to lock in a low rate. Additionally, as make-up buying from the disruption of spring 2020 fades, home purchases will be propelled by underlying demand in 2021. This demand will come from a healthy share of Millennial and Gen-Z first-time buyers as well as trade-up buyers from the Millennial and older generations.

We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year. While home sales are expected to lose some momentum over the last months of 2020, the shallower than normal seasonal slowdown creates a higher base of activity leading into 2021 that is roughly maintained for the first half of the year. As vaccines for the coronavirus become broadly available to the public, and economic growth reflects the resumption of more normal patterns of consumer spending, home sales gain even more in the second half of the year.

Home Prices

With the already limited inventory of homes for sale relative to buyers pushed further out of balance by the pandemic that brought out buyers in mass and kept many sellers pondering their options, home prices skyrocketed surging up more than 10 percent over year-ago levels by the late fall. We expect the momentum of home price growth to slow as more sellers come to market and mortgage rates settle into a sideways pattern and eventually begin to turn higher. The large number of buyers in the market, including many Gen-Zers looking to buy their first-home and Millennials who are both first-time and trade-up buyers will keep upward pressure on home prices, but rising numbers of home sellers will provide a better relief valve for that pressure.

We expect home prices in 2020 to end 7.6% above 2019, after a seeing near record high boost in the summer and early fall, but beginning to decelerate into the holidays. From there, we expect price gains to ease somewhat in 2021 and end 5.7% above 2020 levels, decelerating steadily through the spring and summer, and then gradually reaccelerating toward the end of the year.


Although the housing market is healing and by many measures doing better than before the pandemic, inventory remains housing’s long haul symptom. There were an insufficient number of homes for sale going into 2020 in large part due to an estimated shortfall of nearly 4 million newly constructed homes. Much to the surprise of many, the coronavirus and recession did not lead to a distressed seller driven inventory surge as we saw in the previous recession, but further reduced the number of homes available for sale. Starting in fall 2020 the housing market saw more than half a million fewer homes available for sale than the prior year. We expect to see an improvement in the pace of inventory declines starting just before the end of 2020 that will continue into Spring 2021, so that while the number of for-sale homes will be lower than one year ago, the size of those declines will drop. We expect a more normal seasonal pattern to emerge which will contrast with the unusual 2020 base and lead to odd year over year trends, but taken as a whole we expect inventories to improve and, by the end of 2021, we may see inventories finally register an increase for the first-time since 2019.

While total inventories will remain relatively low thanks to strong buyer demand, the number of new homes available for sale and existing home sellers, what we call “newly listed homes,” will be more numerous which will help power the expected increases in home sales.

Key Housing Trends

2021 TRENDS: Millennials & Gen Z

The largest generation in history, millennials will continue to shape the housing market as they become an even larger player. The oldest millennials will turn 40 in 2021 while the younger end of the generation will turn 25. Older millennials will be trade-up buyers with many having owned their first homes long enough to see substantial equity gains, while the larger, younger segment of the generation age into key years for first-time homebuying. At the same time, Gen Z buyers, who are 24 and younger in 2021, will continue their early foray into the housing market.

In early 2020, younger generations, including Millennials and Gen Z, were putting down smaller downpayments and taking on larger debts to take advantage of low mortgage rates despite rising home prices. In fact, only a quarter of respondents to a summer survey reported lowering their monthly mortgage budget or not changing their home search criteria in response to lower mortgage rates. The other three-quarters said low rates would enable them to make a change to their home search, and the most commonly cited change was buying a larger home in a nicer neighborhood.

We expect these trends to persist as rising home prices require larger upfront down payments as well as a bigger ongoing monthly payment due to the end of mortgage rate declines. Early in the pandemic period, there was concern that temporary income losses could prove to be particularly disruptive to younger generations’ plans for homeownership, as these were the groups expected to face income disruptions that might require dipping into savings which would otherwise be used for a down payment. Thus far, these disruptions have not had an effect on overall home sales, and some home shoppers report an ability to save more money for a downpayment as a result of sheltering at home, but we are still not completely through the pandemic-related economic disruption.

2021 TRENDS: Remote Work

As we discussed in early 2020, 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.

Housing Market Perspectives

What will 2021 be like for buyers?

The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Areas that can ramp up affordable housing supply will benefit and see an influx of buyers.

While buyers will be able to visit homes in person, a strong preference for most shopping to buy, they will take advantage of the industry’s acceleration toward technology to check out homes, explore neighborhoods, and research the purchase online, saving time and energy to focus on a more selectively curated list of homes to view in person.

Although the pace will slow from late 2020’s frenzy, fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers learning the ins and outs of making a major decision in a fast-moving environment. Buyers who prepare by honing in on the neighborhood and home characteristics that are must-haves vs. nice-to-haves and lining up financing including a pre-approval will have an edge.

What will 2021 be like for sellers?

Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise. Sellers hoping to see further double-digit price gains will likely be disappointed, but those setting reasonable expectations can expect to see a timely sale and will want to focus on their next move.

All I Want for Christmas is…  A Vacation Home?  

Adam Ducker and Kelly Mangold, RCLCO| December 18, 2020


In early 2020 just before the Covid-19 outbreak, RCLCO conducted a national consumer preference survey exploring the interest among high-income U.S. households regarding buying or continuing to own second homes.[1] While the results were quite encouraging, April didn’t seem like the right moment to share this data and talk about what it might mean for real estate investors and developers.

But then the second half of 2020 happened. Most U.S. second home markets experienced dramatic growth raising the question: Is the Covid-19 second home boom a symptom of the public health, economic (counter-intuitively), and societal crisis or is it an acceleration of a pre-existing condition? It seems to be the latter!

The unique timing of the initial survey and surprising market evolution prompted us to follow up with the same households in December to ask how their preferences had changed in the past 9 months due to the effects of the Covid-19 pandemic. The study has resulted in a robust look into second home ownership preferences before Covid-19 and gives insight into how second home sentiment has changed over the year.[2]

This complete dataset with pre-COVID and during COVID data will be available to share with RCLCO clients in 2021, but we are pleased to share some highlights here, which should bring some holiday cheer.

The results show remarkably strong market sentiment with approximately 37% of current homeowners indicating they are happier with their second homeownership than they were before the pandemic, and 33% of prospective buyers indicating that they are more interested in purchasing a second home than they were before the pandemic.

Both groups of current and prospective second homeowners overwhelmingly feel the market for second homes in the area they currently own or are considering owning is strong, though for prospective buyers there is concern about limited inventory.

Encouragingly, for those who are currently considering the purchase of a second home, despite what might seem to some like elevated prices in many markets at this time, 56% believe this is a good time to buy (though like the prior question, about half of this group is concerned with lack of inventory). Of the remaining prospective buyers, 29% think it might be a good time to buy, and only 15% think it is not a good time to buy.

Remote work is not the only driving factor in the positive sentiment in the second home market, though the ability to work remotely seems to have had more of an impact on prospective buyers than current owners. 43% of survey respondents can work full-time during Covid-19, 12% can work part-time, and the remainder cannot work remotely or are retired/not working. When comparing current second homeowners, there was a slight indication that current owners who can work remotely were happier with homeownership during Covid-19. However, for prospective buyers, a significant share (30%) of remote-working households indicated they were “somewhat more interested” in purchasing a second home than they were before the pandemic, compared with households who are not able to work remotely (12%).

RCLCO plans to share the full results of the 2020 Second Home preference data in early 2021 in a webinar. It will include details about product type preferences, location preferences, questions about using a second home as a rental property, and much more. RCLCO will also share more details on how Covid-19 has changed sentiment toward second homes including any changes to location, product type, rental plans, and how sentiment has been impacted by the ability to work remotely. If you are interested in access to an interactive dashboard of this data when it is available, please email us by clicking here.


[1] Survey performed in late Feb/early March 2020, households residing in the United States age 18+ with incomes $200,000+, who are interested in owning or already own one or more second homes. 1,079 initial qualified respondents.
[2] Recontact survey of original respondents yielded 358 recontact responses, for a 33% recontact rate.
[3] Includes households who indicated they are happier or are happy with by considering a home in a different/more convenient location as a result of Covid-19

Disclaimer: Reasonable efforts have been made to ensure that the data contained in this Advisory reflect accurate and timely information, and the data is believed to be reliable and comprehensive. The Advisory is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort and general knowledge of the industry. This Advisory contains opinions that represent our view of reasonable expectations at this particular time, but our opinions are not offered as predictions or assurances that particular events will occur.

Affordability and Lack of Supply Put a Dent in New Home Sales

National Association of Home Builders | December 23, 2020

New home sales dipped in November, but remained at a solid level as builders struggled to meet demand and gain access to building materials.

Sales of newly built, single-family homes in November fell 11% to an 841,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Despite the monthly decline, the November rate is 20.8% higher than a year ago.

“Though the market remains strong, the pace of sales pulled back in November as inventory remains low and affordability concerns persist as builders grapple with a shortage of lots, labor and building materials,” said NAHB Chairman Chuck Fowke.

“The home building industry saw a historic gap between the pace of new home sales and construction of for-sale single-family housing this fall,” said NAHB Chief Economist Robert Dietz. “As a result, the pace of new home sales was expected to slow to allow construction to catch up. This appears to have occurred in November as inventory of completed, ready to occupy new homes was down 43% compared to November 2019 at just 43,000 homes nationwide.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the November reading of 841,000 units is the number of homes that would sell if this pace continued for the next 12 months.

Inventory rose slightly to a 4.1 months’ supply, with 286,000 new single-family homes for sale, 11.2% lower than November 2019. Of the inventory total, just 43,000 are completed, ready to occupy.

The median sales price was $335,300. The median price of a new home sale a year earlier was $328,000.

Regionally, on a year-to-date basis new home sales were up in all four regions: 28.2% in the Northeast, 24% in the Midwest, 16.9% in the South, and 20.5% in the West.