Housing Market Forecast: What's Ahead in 2021?
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, in breaking record fashion!
With that in mind, there’s one big, currently lingering question: will the housing market in 2021 follow the same upward trajectory or are we facing a possible downturn?
Let’s look at what leading real estate experts are projecting for 2021 so you have the knowledge and confidence you need to succeed in the new year.
Interest rates are projected to stay low
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.
Home sales are projected to grow by 7%
That’s because experts are predicting a 7% increase in home sales compared to 2020.
Following this news, is one major indicator in the 2021 forecast: we are likely see an increase in inventory. Whether it’s cautious homeowners who waited out the pandemic or newly built homes, more inventory will certainly be a welcome change.
Home prices are projected to appreciate by 3-4%
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 heading for another bubble, remember to keep it all in context.
With light at the end of the tunnel regarding the end of the pandemic, experts expect inventory levels to rise and home prices to appreciate in a consistent manner.
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.
Good news... 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.
One More Thought
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.
If the market does copy expert projections this year the same way it did in 2020, prepare for another fast & furious year in real estate.