- Experts project an optimistic year for the 2021 housing market.
- With mortgage rates forecasted to remain low, high buyer demand is expected to fuel more home sales and continue to increase home prices.
- Let’s connect today to determine how to make your best move in the new year.
Housing Market Perspectives
What will 2021 be like for buyer
The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Areas that can ramp up affordable housing supply will benefit and see an influx of buyers.
While buyers will be able to visit homes in person, a strong preference for most shopping to buy, they will take advantage of the industry’s acceleration toward technology to check out homes, explore neighborhoods, and research the purchase online, saving time and energy to focus on a more selectively curated list of homes to view in person.
Although the pace will slow from late 2020’s frenzy, fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers learning the ins and outs of making a major decision in a fast-moving environment. Buyers who prepare by honing in on the neighborhood and home characteristics that are must-haves vs. nice-to-haves and lining up financing including a pre-approval will have an edge.
What will 2021 be like for sellers?
Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise. Sellers hoping to see further double-digit price gains will likely be disappointed, but those setting reasonable expectations can expect to see a timely sale and will want to focus on their next move.
According to an NAR survey of more than 20 top U.S. economic and housing experts, we can expect:
– GDP growth of 3.5 percent in 2021 and 3.0 percent in 2022
– An annual unemployment rate of 6.2 percent next year with a decline to 5.0 percent in 2022
– Average annual 30-year fixed mortgage rates of 3.0 percent and 3.25 percent for 2021 and 2022, respectively
– Annual median home prices to increase by 8.0 percent in 2021 and by 5.5 percent in 2022
– Housing starts of 1.50 million next year and 1.59 million in 2022
– The share of the U.S. workforce working from home to be 18 percent in 202—down from 21 percent in —and 12 percent in 2022
– Small declines in office and hotel vacancy rates in 2021, with a slight increase in retail vacancies next year
Sourced: National Association of Realtors
“If you had told me that last year in 2019, we would finish the way we did and that in 2020, the housing markets would finish ahead of where we were, I would have been surprised. To think about what’s happened with the pandemic, I’m shocked.” -Charlie Oppler NAR President