While 2020 has faced its fair share of ups and downs, we know one thing to be true: the real estate market not only met expert predictions, it surpassed them, breaking records along the way. With that in mind, there’s one big blaring question right now: will the housing market in 2021 follow the same trajectory or are we facing a possible downturn?
Let’s take a deep dive into what leading real estate experts are projecting for 2021 so you have the knowledge and confidence you need to succeed in the new year.
One of the biggest drivers for this year’s booming real estate market were record-low mortgage rates. Because of this, affordability reached one of the highest levels it has in the last 30 years. Naturally, eager buyers followed. The good news is, experts are predicting that mortgage rates will remain low for the foreseeable future.
While home prices continue to appreciate across the country (more on that later), the counter of the low mortgage rates have made purchasing a home increasingly affordable, especially for first-time homebuyers.
This trend is expected to stick around in 2021, but a possible slight increase in mortgage rates and appreciating home values could lead to a slight decrease in affordability for 2021.
Experts are predicting a 7% increase in home sales compared to last year.
This signifies one big piece of news: we will likely see an increase in inventory for 2021. Whether it’s hesitant homeowners who waited out the pandemic or brand spanking new homes from builders, more inventory will be a welcome change from the last year.
It’s a simple case of supply and demand. When high buyer demand meets low inventory, homes prices will appreciate. This year, however, we saw it at a faster-than-usual pace averaging about 7% nationwide.
For 2021, experts project that we will continue to see appreciation, just at a slower pace that’s reflective of a more balanced market. While some may be worried that the rapid acceleration of home values means we’re headed for another bubble, remember that context is everything. With the end of the pandemic in sight, experts expect inventory levels to rise and home prices to appreciate at a more steady pace.
The massive wave of unemployment that came along with the pandemic led some homeowners across the country to enter mortgage forbearance. While unemployment is slowly but surely declining (and ahead of expectations), it will be a while before we reach the pre-COVID levels. Because of this, foreclosures are expected to rise.
However, experts don’t anticipate this will lead to a foreclosure crisis like we saw in 2008. They also don’t expect it to lead to the major home value depreciation that followed.
Despite everything that happened this year, the real estate market not only survived but thrived, playing a big part in our economic recovery along the way. The next 12 months are just as promising, with interest rates expected to remain low, buyer traffic staying high and inventory levels predicted to rise. Let’s connect today to determine how to make your best move in the new year.