Housing Market Forecast and Predictions for 2021
in Daily Dose, Featured, News 1 hour ago
Shelter-at-home orders and other measures were put in place just before springtime this year, which is usually the best time of year for listing and selling homes. However, 2021 poses to be a much more stable year for real estate, according to Realtor.com.
Low inventory, a higher number of buyers than sellers, and historically low mortgage rates sent housing prices upwards quickly. It also made fall the hot time of year for sellers instead of the warmer months.
But 2021 should send things back to where they once were and continue pushing new trends that were emerging even before the pandemic.
Since mortgage rates of around 3% have become the norm, they don’t feel as exceptional and won’t entice buyers as they have in the recent past.
Realtor.com predicts home sales to come in at 7.0% above 2020, building momentum through the spring and continuing through the end of the year. Economic growth from coronavirus vaccines and more normal consumer spending will fuel this trend.
As for home prices, they’re still going up, but they’re slowing down. 2020 is looking to end 7.6% over 2019. But 2021 should only increase by around 5.7%. This will be aided by many millennials trading up and adding inventory to the market.
Speaking of inventory, 2020 saw half a million fewer homes on the market than the previous year. However, “newly listed homes” should be more numerous by the end of 2021. And we may even see an increase in inventory—a first since 2019.
The big trends to watch out for, however, are an increase in first-time buyers, people wanting at-home offices, and suburban migration.
Millennials make up the largest generation, and on their heels are the Gen-Zers who are entering their home-buying years. The older Millennials, those approaching 40, will be looking to trade up and purchase bigger homes to accommodate growing families. These two generations have been able to save money due to shelter-in-place orders and less going out in general, meaning they’ll have more money for down payments.
Remote work was already a growing trend before the pandemic forced more white-collar workers to stay in their homes. And it looks like many will continue to primarily work away from the office, adding to the appeal of the suburbs. Look for an increase in listings mentioning home office space or even close-to-home remote-working options, like coffee shops.
Since commutes have changed, so has the need to be downtown. More people are comfortable with the idea of commuting further if they have to than before, according to a summer survey.
Sellers will continue to have the upper hand throughout the entire year due to an accelerated buying process—thank you, lower inventory. But all in all, 2021 should feel more normal and predictable than 2020.