Sure, it’s difficult to guess what will happen next year. Who could have predicted that 2020 would introduce a global pandemic into our world? For our annual Predictions issue, we talk to the experts — the biggest names in Chicagoland real estate. What are the things that agents need to be cognizant of as they head into the new year? And how will COVID-19 continue to impact the real estate industry? Will the housing marketplace continue to thrive? We get invaluable insight from the experts that will set us up for a successful 2021.
Panel of Experts:
- Peter Andreotti, area sales manager and VP, Wintrust Mortgage
- Jeff Benach, principal, Lexington Homes
- Fran Broude, senior managing director, Compass
- Nina Fotopoulos, senior vice president, strategic growth, Baird & Warner
- Jeff Lasky, CEO of the North Shore-Barrington Association of Realtors
- Nykea Pippion McGriff, President of Chicago Association of Realtors and managing broker, Coldwell Banker
- Roy Taylor, regional vice president, Draper and Kramer Mortgage Corp.
- David Wolf, CEO of Wolf, Development Strategies
- Thad Wong, co-founder and co-CEO, @properties
We’ve all been weathering the changes that Covid-19 brought into our lives. What revelations have you learned about your business over the last year? Will any of this apply to the way you do business in the future?
Wolf: Since the pandemic, we’ve learned to plan ahead for delays and bumps in the road as the marketing and sale process has changed. We were fortunate in that we already had the infrastructure and tools in place to sell new developments both in-person and remotely, and that level of expertise helped during the stay-at-home orders. Another lesson learned this past year was the importance and relevance of solid design, programming and floor plans now more than ever as people spend more time at home.
Broude: We have all learned that it is more important than ever to be connected to your clients/sphere of influence through a robust customer relationship platform. Not only is the reach out messaging important, but also the consistency. This should remain a key component to all real estate professional’s business in the future.
Benach: Market demands and priorities can change on a dime. You have to be nimble with your product design and always be ready to spot changes and be proactive thereto. I think, even after the pandemic subsides, buyers will place greater emphasis on outdoor open space. We have many buyers coming from an apartment or condo in the city, and they like the green space, large floor plans and office space in the homes.
Lasky: Our resiliency in the face of constant and dynamic changes and our ability to be agile and responsive to the rapidly evolving needs of our Members, as well as the clients and communities that they serve. NSBAR saw 2020 as an “occasion for innovation” and embraced change as a way to accelerate a host of process improvements organization-wide. Things like remote learning opportunities that empower Members to continue their professional development from the safety and comfort of their own homes; virtual events that enable us to reach and engage with a far greater audience than can ever be achieved physically; ongoing multimedia podcasts and other forms of digital communication that give us superior ways for us to interface with our Members about important matters to them and their business; and outbound Member Outreach services,
Fotopoulos: Buying a home is an emotional decision, and the consumer needs guidance and communication more than ever. We’ve all learned that working remotely can be efficient. Eliminating travel saves time, distractions — and the need for designer shoes. For the agent, it spotlights the importance of quality and frequent communication. Video conferencing, FaceTime, Google meets and Zoom have opened the door to build and maintain good client relationships. Meetings are more robust and on topic; participants come prepared and on time. In addition, the ability to record video conferencing for playback later is a bonus.
Pippion McGriff: The biggest thing I’ve learned this year is to utilize the tools that are at my fingertips. Analyzing market data is beneficial in any market but was a key to helping me pivot when COVID-19 hit the market. Also, tools like CloudCMA Live, HomeSnap and Remine have helped me deliver information from my living room to my clients’ living rooms. I have also been using this time to sharpen my skills as a broker. I have obtained additional certifications that have helped me remain focused on being an expert and advocate for my clients.
Andreotti: We have learned that we can be productive in a work from home environment. I am also impressed with the flexibility of our employees. Within weeks, our entire team had to change the way we do business. Employees had to set up home offices and balance work and home life. Moving forward, I believe that we will continue to be productive “working from home” and interacting with our referral sources remotely.
Wong: We have become more aware of the power of engagement. Never have we had our agents all in the same place at the same time feeling the same thing. There was an incredible benefit as we had the ability to offer agents exactly what they needed to move forward. We had a shared understanding that the world was not ending and a realization that the only option was to grow. Remembering the benefits of that level of engagement will drive us to create even better programming to strive for that feeling once again, even without a pandemic spurring the need to do so.
Taylor: Thankfully, our organization had already invested in technology and had been working at least partially remotely for some time. We give a great deal of credit to all our staff, as productivity soared, and we didn’t miss a beat. Going forward, we expect more and more team members will want to work at least partially from home and that our brick-and-mortar footprint will be reduced.
Also in this issue
Assuming we are still dealing with the pandemic for many months to come, what changes should we expect in the Chicago real estate market in 2021? If a vaccine is distributed next year, what impact will that have on the real estate market?
Benach: It may slow the urban flight that’s happening now as a result of COVID-19. It will also allow folks with homes to sell to have more comfort letting strangers walk through their homes.
Taylor: With mortgage interest rates at historic lows along with an extremely tight housing inventory, we anticipate a strong real estate market for at least the first half of 2021. A vaccine will likely translate to a stronger economy and rates moving higher in the second half of the year, all at a measured pace.
Lasky: In many, many ways, agents have figured out how to operate quite well during the pandemic — adapting their business practices to continue to safely and effectively service their clients. If the pandemic continues into the foreseeable future, we expect real estate to remain both an essential and a thriving business sector, and the lynch-pin of overall economic activity and vitality. The real estate market will continue to remain robust, especially with tighter inventory and historically low mortgages rates driving this market. A successful vaccine distribution should only serve to allay public fears and amplify the demand out there, as the economy will hopefully stabilize once the virus has been brought under control.
Fotopoulos: I believe we will see the continuance of a robust market. The seasonality of real estate has been leveling and COVID-19 has fast-tracked this trend. We’ve seen this shift during the last several months. This will continue to some extent. Add pent up demand, homes which no longer suit the needs of the newly defined COVID-19 lifestyle combined with low interest rates, and we’ll have a winning 2021. Availability of the vaccine will result in an increase in business for Realtors.
Pippion McGriff: I do believe that the trends we have seen in the market recently will continue into next year, even if we are still dealing with the pandemic. Housing remains essential. Consumers still want to buy a home, although their wants and needs have evolved with the pandemic. More space, outdoor access, and an office or spare bedroom have been in increased demand due to working and educating kids at home. We saw the market spring back once the stay-at-home order was lifted in Illinois, and I anticipate that this pent-up demand will continue again if a vaccine is distributed.
Andreotti: I believe that we will continue to see the population look for opportunities to move from the city to the suburbs. Given work from home and shelter in, people are looking for home offices, home gyms and large yards. Unfortunately, this does not bode well for urban areas. If a vaccine is available, I believe that the “flight to suburbs” trend may slow, and buyers will look for opportunities for value in the city.
Wong: I don’t think we will see significant increased sales in downtown condos until the summer. Once summer hits and the vaccine has been distributed to a solid percentage of Chicagoans, the millennials (many with the help of their parents) are going to drive the downtown condo recovery. I believe a strong percentage of them will take advantage of low rates combined with heightened supply and begin absorbing our inventory. This in turn will drive downtown condo sellers into larger units and single-family homes. I am very bullish on Chicago residential.
Broude: It’s likely the first half of 2021 may be very similar to how we have been conducting business for the last several months. Nationally the predictions for 2021 are for continued growth of both existing homes sales and new home sales. I believe that will continue here locally also. It will take some time for mass distribution of the vaccine. And while interest rates may inch up a bit the local real estate market should remain strong in 2021.
Wolf: The market can expect to see more move-up buyers seeking larger floor plans, as well as renters ready to enter the for-sale market. I anticipate next spring will be a strong market, continuing to gain momentum into summer 2021, as a result of pent-up demand, low rates and increased consumer confidence.
Do you think the trend of homebuyers leaving cities for suburban areas is real, and if so, do you think it will continue in 2021? Why?
Benach: Yes. I think mindsets about urban centers in general are changing. I don’t think the fleeing will be permanent, but I do think you’ll see a greater emphasis on what smaller cities and metros have to offer.
Lasky: Time will tell if this is a lasting trend or not, and also what may be driving this (beyond the pandemic). There is clearly an interest on the part of some to move away from high-rise, elevator buildings to larger homes. More time spent in your home means for those who can creating a space that has many of the amenities you used to go out for, like a great kitchen, home entertainment center, etc.
Fotopoulos: There’s a concern regarding increased city and state taxes in Illinois. With more workers working from home, some have chosen more remote areas, as the need to commute is no longer necessary.
Andreotti: The trend is real. Train access, home office, home gyms and yards are top priorities for suburban home buyers. The work force continues to be comfortable with work from home and Zoom calls, therefore decreasing the desire for a short (downtown) commute.
Taylor: For now, this trend is quite real in Chicago. Since the pandemic, the city market has been soft when compared to the suburbs. This is causing suburban prices to escalate and city prices to drop a bit. I believe as the pandemic ends and the city begins to open and get back to normal, the city market will come back into balance.
Pippion McGriff: One thing we’re seeing is a lot of clients accelerating their plans — many buyers had planned to move but are accelerating that timeline due to the record-low interest rates. Additionally, changing household needs for more flexible space are fueling the transition to more spacious homes. People are seeking more home space to adapt to their needs for office space. Also, the record-low interest rates may be causing people who are renting to consider moving up their buying timeline.
Wong: There is definite reality to it. The size of the reality just doesn’t match the size of the narrative. Families will still shift to the suburbs at a higher rate for the next few years. All of the families who moved there will let their friends know how awesome it is and lure them out of the city. But, once Chicago opens back up, our museums are humming, the crowds are cheering, the restaurants are serving and the parks are thriving and the commutes are back, many of those “excited to be in the suburbs” families will long for the day that they can return to our city.
Broude: Yes there has definitely been a trend of the some of the buyer population moving to suburban markets, as working remotely has proved to be a viable option for many companies and families.
Wolf: In the Chicago market, reports of a flight to the suburbs are exaggerated and will be shown to be a short-lived trend as the urban lifestyle is still considered a top amenity for many buyers. Those who did make a move from the city were, in many cases, first-time buyers who had always planned to buy their first home in the suburbs, and the pandemic essentially accelerated that timeline. With recent news about emerging vaccines, buyer sentiment will continue to rise, as will demand for the various social and cultural experiences that only urban centers can provide.
Looking into the crystal ball
A new presidency, and changes in inventory, will all affect the work of real estate agents next year. All things considered, do you expect your 2021 business to thrive, decline or remain stable? Why?
Lasky: We fully expect that as the virus is brought under some degree of control — both with promising vaccines and effective therapeutic treatments — that the economy will begin to re-emerge and hopefully bloom again with greater stability. That is nothing but good news for real estate, because people will start to return to all of the “normal” considerations and “routine” life-changes that drive so many real estate sale and purchase decisions.
Andreotti: Given the guidance provided by the Fed, we expect the interest rate environment to continue to be very favorable well into 2021. The industry will continue to struggle with operational capacity. The housing market will be strong, and only limited by supply. Additionally, more homeowners will benefit from refinancing than the industry will have capacity.
Pippion McGriff: Based on the market data and trends we have seen within the past few months, I believe we will see the market remain stable. We’re probably going to see more dips, and then rebounds, pending any stay-at-home orders and how the winter months shake out. But, demand remains high and interest rates remain at record lows. At the end of the day, the state of our business depends on the future of COVID-19 and a potential vaccine. The virus has created a lot of uncertainty, but Realtors have found ways to step up in light of this and create opportunities.
Wong: Our business will thrive but without the manic feeling associated with COVID. We have all learned to live with COVID and how to operate safely. The agents that know how to hustle will lead the market as always. Inventory will not come available fast enough to keep up with demand, which will benefit the agents willing to work harder and smarter. 2021 will be a very good year. Seasonality will be back, but I do predict the summer to be abnormally busy; not as busy as ‘20, but busier than usual.
Taylor: Overall, I expect 2021 home purchase volume to stay strong, and I anticipate total mortgage volume, including refinances, to be less. Affordability due to low mortgage rates, a strengthening economy and people making moves that had been delayed will all contribute to a good year ahead.
Broude: I expect it to thrive! Interest rates are low, affordability is good, and consumers are making different lifestyle choices when purchasing homes, including second/vacation homes.
Wolf: Since early November, we have seen increased traffic at our sales galleries and fielded more calls from developers who are looking ahead and planning for a post-COVID world — one in which buyer and renter preferences will have evolved. As a result, we expect our 2021 business to easily outpace 2020.
Fotopoulos: We’re on track to rock 2021. I predict it will be outstanding. We have inadvertently redefined what our home really means and how very important home is to our lives. And for those who will continue to work from home beyond the pandemic, the right space is an absolute must.
Benach: I see it remaining about the same, with maybe a slight uptick.
What will be the biggest challenges and opportunities for agents, lenders and brokers in 2021?
Andreotti: The biggest challenges for 2020 will continue in 2021. Adjusting sales strategies to the current environment will be the biggest challenge — earning trust of referral sources and customers without the ability to meet in person. Technology continues to improve to provide a better work experience — Zoom video, remote closings, FaceTime open houses and appraisals.
Taylor: My hope is that the biggest challenge will still be the sheer volume of loans due to low rates, because that is a win for everyone. Homeowners either get into their dream home or improve their financial position by reducing their mortgage rates and monthly payments, and lenders and agents continue to employ more and more people to keep up with the demand to put homeowners into better situations for their families. At Draper and Kramer Mortgage, we were able to double the size of our team in 2020.
Pippion McGriff: We can really be advocates for our clients and show the value of our knowledge and what we do. The challenge will be to remember to take care of yourself. This is an incredibly difficult time for everyone — mental wellness is so important. Taking advantage of resources and ensuring you are still maintaining some balance is critical. Ensuring we are making time for both our professional and personal life will be important, as the two have easily become enmeshed since many of us have been working from home. Taking the time to exercise, meditate, eat well, journal and more can help manage mental health when times get tough.
Wong: Inventory, inventory, inventory. He/She who has the most inventory wins. For lenders, he/she who has the best relationships wins.
Broude: Inventory remains very low in many markets, which can be a challenge.
Wolf: One significant challenge will be getting consumers to feel more confident about making an investment in real estate. COVID-19, civil unrest, contentious elections and Illinois’ ongoing financial struggles have all contributed to an erosion in confidence here. To navigate this challenge, service providers and advisers must be thoroughly informed to help consumers make a sound decision. Customers want guidance, knowledge and substance when the world around them changes — in some cases, permanently.
Fotopoulos: I think we’ve shown our resilience and creativity as an industry. We are an amazing group of entrepreneurs, who by definition are innovators and problem solvers. There will be challenges for those who don’t adapt well to remote services, and companies that aren’t prepared to move quickly, or have problematic technology and delivery platforms. The opportunities are tremendous. New roles are evolving for professional support services. How we facilitate everything from engaging the client to our relationships beyond the transaction must be flawless and professional. Today’s associate is more focused on the interaction with clients than ever before. Leaving the minutiae of the business to highly skilled support in the form of company services or hired agent support is no longer a luxury — but a necessity. I’m excited for today’s professional because they’re in a stronger position to focus solely on the client.
Benach: Challenges will be to continue getting increased foot/physical traffic while the pandemic persists.
Lasky: The continued acceleration of all kinds of changes — especially in the digital marketplace — are things that Realtors need to be ever-mindful of. Those that are able to adapt rapidly and retool for the reboot will do very well in 2021 and well beyond. This is a business of continuous change that demands the forward-thinking capabilities and agility of the entrepreneur to move with the market and trends, to ride the next wave, and the wave after that, and not get swept under by holding on to antiquated practices too long. We will see progress in technology, affecting the transaction itself and our interactions with customers.
How do you believe the markets will differ under a Biden presidency, if any?
Pippion McGriff: President-elect Biden has a $640 billion housing plan that addresses issues such as redlining, increasing housing supply, increasing energy efficiency and more. If he can turn that plan into a reality, I hope we will see an increase in homeownership across America, specifically for low- and middle-income Americans, which would be great for the market. Real estate remains an excellent vehicle for building generational wealth, and he’s indicated that diversity, equity and inclusion are important to his administration. We hope that will extend to housing.
Wolf: Election years are generally bad for real estate sales, regardless of who wins. I think certainty, positivity, stability and moving through the unrest and an improving pandemic situation will help the market. If people are able to go back to work and unemployment levels drop, the real estate market will follow. There are definitely questions surrounding some of President-elect Joe Biden’s tax plan as it pertains to real estate, but it’s too soon to tell, and some of the likelihood of that moving forward depends on who controls the U.S. Senate.
Fotopoulos: I believe the impact on Chicagoland homeowners will be slight if any.
Lasky: We expect that the markets will continue to remain stable under a Biden Presidency. There appear to be some clear priorities for the new administration. There will be funding and investment directed toward the creation of more affordable housing. The President-elect has stated his intention to give first-time homebuyers a refundable, advanceable tax credit of $15,000. Both of these initiatives will spur activity in the new homeowners part of the market.
What trends can agents expect in the new year? Where will the hottest communities and neighborhoods be in 2021?
Taylor: Markets with strong schools and easy access to the city via the train are well positioned. It will be interesting to see how the far west suburbs do in the coming future as people have realized how much space they all need, and the far west suburbs are generally more affordable.
Wong: Because downtown condos have slowed, the percentages will point to the Gold Coast and River North. But the neighborhoods beyond downtown will be driven by single family sales and will struggle to keep up with demand. Lincoln Park will lead the way alongside Bucktown, Wicker Park and Logan Square. Bronzeville will continue its recent run. I think there will be continued focus on Uptown and the further out areas with great starter single family homes like Jefferson Park.
Fotopoulos: Each neighborhood and community in Chicagoland has something to offer. Some city owners are opting to move to neighborhoods and suburbs as families discover a greater need for expanded space. Suburban markets identified as having great schools and walkable robust downtown areas are very attractive. Restaurants and shopping with easy access to transportation are a must.
Do you think consumers will get used to virtual showings enough to keep them as a regular practice?
Wong: I think that from an efficiency perspective, agents should rely on video and virtual tours as the first showing. In my opinion, those are the most important showings as they decide if there will be a live tour or not. Photography, videos and virtual walkthroughs have gotten so good that you know if the property meets your needs or not, eliminating the need to have a live walkthrough in most cases. We learned that we only need to see the houses which we are really likely to buy. There is no longer a need to see real estate just to see real estate.
Broude: Yes, I believe they will. Obviously, consumers want to walk through the homes they are contemplating making an offer on but the need to visit numerous homes in person will likely be replaced by virtual showings.
Taylor: I would guess that initial showings will be done virtually a lot more often, but I think the typical buyer will want to step inside of a home before buying it. Given the fact that this is usually the largest purchase they make in their lives, buying virtually would be a pretty big leap for most.
Fotopoulos: Absolutely. Sellers are looking for people who have already narrowed down their choice of area, neighborhood and village. Private video showings and aerial photography that allows street views — and the ease of walking through a home on your computer changes everything. We’re seeing more progress across the industry to meet consumer demand in this area.
Pippion McGriff: I believe that a virtual showing is another great benefit to offer to our clients. Having consumers embrace and have access to virtual showings will be important for our marketing moving forward.
Do you think the number of new people getting real estate licenses will grow in 2021?
Wong: Very likely. One of the saddest consequences of the pandemic is the number of jobs that have been eliminated. A good percentage of the population will be searching for something to replace those jobs, and real estate, primarily because of the TV, has become a dream job for so many. But as we know, reality is not as easy as TV.
Fotopoulos: Yes, they’ve discovered their next passion as consumers looking at houses online as a hobby in quarantine, and now they want to be agents themselves. I believe the result will be a new breed of professional, prepared for the next generation of real estate.
Pippion McGriff: The Chicago Association of Realtors’ affiliated school, the REALTORS® Real Estate School, saw a 71% increase in students from June through August 2020 compared to the year prior. Real estate was deemed essential in Illinois when the COVID-19 pandemic began, so people view it as a business that won’t get shut down. I anticipate that appeal will continue into 2021 due to the benefits like growth opportunities, flexibility and unlimited earning potential that real estate offers.
What do you see happening with home prices in 2021?
Wong: I see appreciation. As usual, Chicago will lag the U.S. But we will have appreciation, nonetheless. People are now willing to spend a higher percentage of their income on their home. Never before has the home meant what it does today, and we will see appreciation over the next few years as a result. In Europe, people have been spending a higher percentage on housing for decades, even with higher living expenses. I think America will follow that trend now.
Fotopoulos: Low inventory will always elevate pricing. We are experiencing very low inventory in most areas and greater sales price increases in the suburban markets. I believe we’ll see most property values increasing steadily.
Pippion McGriff: If inventory continues to be constrained in certain segments of the market, I see home prices rising or staying close to where they are now. Demand is high, particularly as renters convert to buyers and rates remain low; this will be reflected in higher sales prices and more multiple offer situations.
Will property taxes continue to increase in Chicago?
Wong: How can they not? We don’t see politicians willing to take on the real elephant in the room. That is why we can’t have honest reform. Unfortunately, I don’t see that changing. We will limp along until something happens where the rubber meets the road or a leader emerges who can take us to the promised land. I do believe it will happen, but it may take 10 years.
Pippion McGriff: According to Mayor Lightfoot’s 2021 budget proposal, the city is proposing a $94 million property tax increase to make up for tax revenue that was lost because of the pandemic. I would safely say that yes, we will see some sort of increase in property taxes in 2021 because it’s the easiest solution.
Fotopoulos: Unfortunately, yes. But there will always be those who look past the taxes for the other benefits of city living. Chicago is one of the most affordable, world class cities in the world.
Is your company feeling increased demand due to low inventory? How is your company responding to the low available inventory?
Wolf: Since we sell new developments, we are impacted by demand differently than the resale market. Developments we’re selling with finished or near-finished inventory are definitely seeing stronger demand.
Benach: We’ve seen increased activity in the western suburbs. We’re increasing production. This fall, we started sales at our new luxury single-family home community in Glenview, and we are seeing strong traffic and interest, and have sold two homes already.
What design changes, if any, have you incorporated into your floor plans because of the shift to work from home?
Wolf: Consumers want access to dedicated office space, functional closet space and generous outdoor space, and developers are responding with floor plans tailored to our new lifestyle. These features were always important but they will be even more so in 2021.
Benach: Open floor plans are still in most demand, but rooms with more specific uses are also being prioritized, like offices and separate workspaces (multiple places for people to work at home simultaneously).
How do you think a possible wave of foreclosures after the moratorium is lifted will impact the industry?
Andreotti: The servicers are prepared to handle the volume of foreclosures. The lessons learned from the 2007-2009 will be applied.
Taylor: Appraised home values have continued to rise, providing more equity for homeowners. Meanwhile, guidelines for loans have stayed more conservative compared to prior to 2008, and lenders have continued to provide flexibilities for borrowers who have suffered financially due to COVID-19. Therefore, while I suspect there will be damage, I don’t see the likes of what we have seen in 2008.
We’ve been told that interest rates will remain low, so what should homebuyers be watching for regarding mortgages?
Andreotti: As stated above, interest rates are forecasted to remain very favorable for homebuyers and homeowners. Regardless of the interest rate environment, homebuyers should work with trusted professionals in the real industry.
Taylor: Online research is a great tool that all mortgage borrowers now use. However, it does come with some misleading facts and interest rates. People should use the Web as a tool for information, but they should also get involved with a professional loan officer early on when considering a home purchase or refinance. A true professional loan officer is someone who gives the borrower all the information they need to make the correct decision for what suits their needs for today and the long term.