Good riddance 2020!
As we ease into what will hopefully be a far better year for all of us, we notice that questions about what to expect from the 2021 housing market are increasing.
As in everything else we’ve experienced of late, there’s no simple answer to what the “new normal” real estate market will look like.
We like to get an overview of both the national and local economies before offering up our best guestimate. We also enjoy reading the various predictions doled out by economists near the end of one year and the beginning of the next.
In a nutshell, there are three forces currently at work in the real estate market:
- Strong demand for homes
- Not enough homes for sale
- Low interest rates
Will these remain in 2021? Let’s take a look at what the experts say.
Demand for homes
Demand is driven by affordability. If interest rates remain low in the new year, strong demand from home buyers will most likely continue.
The unknown in the equation is whether and by how much home prices will rise in response to the strong demand.
“Realtor.com®’s 2021 housing forecast predicts record-high prices will continue rising in 2021,” notes Clare Trapasso. This may just knock first-time home buyers and others on a budget out of the market.
She goes on to say that the forecasters say that price growth will slow because the tight inventory of homes for sale will ease. “…the double-digit price hikes seen this year aren’t expected to carry over into the new year,” she concludes.
Not enough homes for sale
Every month, the gap between the number of homes sold and the number of new listings widens. Unless more homeowners decide to sell, the experts at Homesnap, a real estate tech company, expect the available housing inventory to remain low.
For example, when compared to 2019, 2020 saw a 0.22% increase in new listings, “…while total sales increased 19.29%.” (housingwire.com)
It may sound trite, but now truly is the best time to sell your home.
Low interest rates
Will mortgage interest rates remain low? There isn’t a lot of agreement from the experts.
“Rates are going to stay low. Demand is going to stay high. And President-elect Joe Biden will offer a tax credit for first-time home buyers,” according to Jeff Lazerson, contributing columnist at the East Bay Times.
Trapasso, citing the realtor.com forecast, claims that “… mortgage rates will begin slowly going up toward the last half of 2021.” She goes on to say that although the hike is predicted to be small, it “… has the potential to price out some buyers or force others to purchase cheaper abodes in less desirable locations.”
Mark Fleming, at housingwire.com, notes that “… consensus forecasts estimate the 30-year, fixed mortgage rate will likely be 3% – with forecasts ranging from 2.8% to 3.3%.”
Getting ready to sell
As you can see, and as is typical, there is not a broad agreement on what we can expect from the real estate market in 2021.
Even if you’re merely considering selling your home, start getting it ready for the market. Do some basic repairs, start de-cluttering and storing items that you don’t routinely use. Consider painting the interior.
We’re happy to give you some tips on where to start, at no cost or obligation to use our services. Feel free to reach out to us. We’re happy to help.