The 2020 housing market, though many were uncertain what it might do, held steady and strong! So…what will the market look like in 2021? Will it follow the same trajectory, become stagnant, or could we see a downturn?
We want to share what the leading experts in the real estate market are projecting for 2021 so that you can have the confidence and knowledge to make informed decisions, and succeed in the new year!
INTEREST RATES
One of the main reasons for our strong market in 2020 was the historically-low mortgage interest rates. Due to these low rates, affordability reached one of the highest levels it has in the last 30 years. Hence why we’ve seen buyers out in droves.
We are happy to report the experts are saying that interest rates for mortgages will continue to stay low for the foreseeable future. In fact, we’ve already seen them dip a little bit since the beginning of the year!
Moreover, while home values continue to appreciate – also at record levels, which is great for homeowners – low mortgage rates counter the high prices, making home purchasing more realistic, especially for first-time homebuyers!
We are expecting this trend to continue in 2021, but a possible increase in interest rates and continuing appreciating could result in a decrease in affordability. Take advantage of these low interest rates while they’re still around!
HOME SALES
If you thought the market was crazy last year, watch as this year unfolds!
Compared to last year, experts are predicting home sales to increase by 7%.
This hopefully signifies one piece of HUGE news: we could see an inventory increase this year! We know builders are working hard on ramping up production, and we should see some homeowners who wanted to wait out the pandemic, but regardless of the source, more inventory will be a very welcome change from last year.
HOME PRICES
We don’t think it’s going to come as a surprise to learn that home prices are projected to increase.
In 2020, we saw appreciation increase at a faster-than-usual pace – average about 7%, nationwide.
This year, experts are saying that we’ll continue to see appreciation, but at a slower rate that’s indicative of a more balanced market.
While some people may worry about the rapid appreciation of home values means we’re heading for another bubble, let’s look at the context:
With the end of the pandemic in sight, experts expect inventory levels to rise, and home prices to appreciate at a steadier pace!
FORECLOSURES
Speaking of the pandemic, we know that it brought along with it a wave of unemployment that led many homeowners to enter mortgage forbearance.
Unemployment is declining, but it will likely be a while still before we reach pre-COVID levels – and because of this, foreclosures are expected to rise.
Experts DON’T anticipate this will lead to a foreclosure crisis as we saw in 2008, though! They also don’t expect the home depreciation that followed back then to happen this time.
Lawrence Yun, the Chief Economist at NAR said, “Any foreclosure increases will likely be absorbed by the market. It will not lead to any price declines.”
BOTTOM LINE
In spite of everything that went down in 2020, the real estate market thrived and even played a big part in our economic recovery.
This year looks just as promising, with interest rates expected to stay low, buyers still out looking, and inventory levels predicted to rise.
If you are thinking about buying or selling this year – get with a Hoss Group agent to keep track of the market, and get access to insider information!
…
Source: Taylor Havins – Realtor at Hoss Group Realty