2021 in Real Estate Investment — What a Year it has Been!
Rising from the shambles caused by COVID-19 in 2020, the global economy- and especially the real estate industry - just had to make some changes. The pandemic hit the world hard, with millions of people losing their lives and livelihoods. Industries were shut down, airports closed, and lockdowns initiated. Things did get better in 2021, both as a result of the vaccines and the world learning to live with the disease.
My name is Ofir Bar. Real estate investments have been a significant portion of my portfolio from day one, especially the housing sector. All in all, despite the bumpy ride, I conclude that 2021 was a good year for real estate — and now I will explain why.
How real estate performed in 2021
Great Return on Investment for the long term
All indicators are showing that interest in properties is expected to soar in the next few years, even until 2030. With a steady growth on the demand side, which is probably going to be bigger than that of the supply side, it is no wonder that prices are heading upwards fast. Since this is expected to go on, long-term investors have only to gain from this.
Mixed reaction
Some investors were still skeptical about investing in real estate in the beginning of 2021, following a dull year in 2020, and the fact that the pandemic is going to be around for a while. I cannot blame them. However, the fact that the ‘game’ was initially left to fewer players made it more promising for those who overcame their skepticism. And, just like I expected, the masses did flock over to real estate towards mid-2021, so the early bird did get the worm here.
Property appreciating value from the 2020 dip
To me, 2021 was the best year to buy property. From a purely business perspective, people were desperate to sell their properties. This reduced value, however, was just momentarily, as prices quickly picked up again. During the year, we witnessed the fastest rise in house values of the past 17 years.
Low mortgage rates
The average global mortgage rate fell to a record low in 2021, as many countries were still tackling the economic effects of the Coronavirus. On one hand, humanity had come to terms with the fact that the virus is here to stay, and that we need to learn how to live with it. On the other hand, the economic damage it left us with was felt in the drop in new mortgages. This brought on great potential for those who could afford to take the risk.
Not only COVID-19
You’d be surprised, but other events affected the real estate industry in 2021. Here are a few examples
Olympics in Tokyo
The 2020 Olympics Games, which were held in 2021 in Tokyo, were a great boost to the country’s real estate. All eyes were on Japan at the time, and needless to say, the real estate sector profited from it. Add to that the fact that the Olympic Village became attractive real estate from the day the Olympics ended, and you’ll understand the impact of the global sporting event.
New boss in Washington
By the end of January, Donald Trump left the White House and a new man, with new policies, took his place. The markets were quick to react with a somewhat pessimistic approach, mainly due to Joe Biden’s more socialist approach, and the real estate market was no exception here.
Climate concerns
2021 was also the year when issues like global warming, pollution, the ozone layer and others became too heavy to be ignored. This, subsequently, brought to a boom in green building and construction. Today, no modern city can afford to overlook this type of real estate in its plans, and while it is more expensive right now, green real estate can be a good investment for the long term.
The future of the real estate
According to analysts, we’re not going to experience a slowdown in real estate anytime soon. The market is picking up at an impressive rate. We expect the following to happen after 2021:
- An immediate end to the record low mortgage rates
- Inventory will remain tight
- Home prices keep on rising
- Other real estate sectors, such as agricultural or storage, are also going to see some changes
It is too soon to elaborate on these issues, since 2022 has just begun, but you can be sure that you will get all of the relevant information if you stay tuned to my blog this year.
