The Swanepoel Report: 6 Real Estate Trends to Watch in 2021
December 16, 2020
Real estate’s quick pivot and rapid adoption of technology has helped sales to boom during the COVID-19 outbreak. 2021 will likely continue that trend, according to a prominent new report.
“Peering into and analyzing 2021 and beyond … the world looks much brighter, more connected, and hopefully more diverse,” according to the 2021 Swanepoel Trends Report published by T3 Sixty, a real estate consulting and research firm.
A few of the trends highlighted in the 216-page report to watch in the new year include:
Real estate adapts in a post-pandemic “new normal.”
COVID-19 continues to transform the real estate industry. Real estate has proven resilient with surging sales and prices during the pandemic, but several trends will likely continue as COVID-19 yields to new vaccines and real estate determines how to operate moving forward. For example, while the increases in virtual home shopping and video communication are likely to be long-lasting trends, virtual closings, reduced office space, suburban relocation, and remote work could also continue to increase, the report notes. Brokerages are adding technology to improve their processes and identify digital tools to better their communications with consumers.
“Our old normal will, however, most likely never return,” the report notes. “When the tide turns, opportunities will emerge and it is he, or she, who adapts that will be ready to seize the day.”
Growth in lead generation–focused models.
A new brokerage model focused on lead generation is expanding the real estate team model concept. This new model includes brokerages that commit to consistent coaching and training, systems, and powerful lead generation processes. Brokerages or teams that generate leads and take other tasks off agents’ plates can charge higher commission splits from their agents than a traditional brokerage, the report says.
“The lead generation-focused business represents a potent opportunity for brokerages and teams to improve their profitability, which many will find it increasingly necessary to do,” the T3 Sixty report notes. “The model requires an extreme commitment to process and management and a significant investment in systems, processes, technology, and staff to operate efficiently.”
From NAR’s Real Estate Forecast Summit
An increase in attention to managing diversity and inclusion.
Homeownership and real estate careers both show that diversity is underrepresented, the report notes. A charge in 2021 for the industry will be to increase racial diversity in homeownership and throughout the real estate industry.
“The real estate industry plays a vital role in helping Americans of all races, beliefs, creeds, genders in finding a home,” T3 Sixty writes in the report. “The industry must serve all people, as well as the increasingly diverse rainbow of races and people.”
While progress is being made, T3 Sixty says more still needs to be done to create an equitable real estate industry. Current real estate leaders, executives, brokers, and agents all have a part in helping to create a more equitable, inclusive society, they say.
Growth in cloud-based brokerages.
Businesses are becoming more virtual in the digital evolution, and real estate companies are ushering in a new virtual, collaborative way to do business. eXp Realty became the industry’s first national cloud-based residential real estate brokerage when it opened in 2010. Since then, it has become the fourth largest real estate brokerage company in the U.S., growing its agent count to more than 32,000.
“Business evolutions triggered by COVID-19—the re-evaluation of office space, the reduction of business travel, and the wider adoption of online software tools—fall within the sweet spot of eXp Realty’s business model and has driven continued growth in 2020 and leaves the company poised for more success in 2021 and beyond,” the report notes.
Brokerages look to add ancillary services.
Brokerages are leveraging revenue and profitability opportunities outside of transactions to grow their businesses. For example, they’re turning to ancillary services, like mortgage, title, insurance, and other lines of business. “Ancillary settlement services represent a promising, increasingly necessary opportunity for residential real estate brokerages,” the report notes. “These additional activities carry an attractive upside, but they also come with significant risk so brokers should proceed with diligence and much caution.”
Housing affordability challenges continue.
The current public health crisis is affecting near-term economic vitality and intensifying affordability challenges that could prevent more Americans from purchasing a home. As the cost of construction increases, researchers report, it will be difficult to build enough mid-priced for-sale and rental homes or to replace the units that are falling out of housing stock due to age. Expensive local regulations and low personal income growth also will continue to worsen housing affordability. Lower-income and first-time home buyers are among those being shut out from homeownership.
“Developments in 2021 will help determine whether the affordability challenges continue to grow,” T3 Sixty reports. “Brokerages and agents can help affordability by first becoming aware of the trend and how it is affecting their businesses and clients in their core markets. With that understanding, they can then learn about and promote efforts at the local, state, and national level that support home building, job growth, and other efforts to make homeownership more affordable for more Americans.”
Updated: April 21, 2021