As the new year rolled in, many have reflected on a year of unexpected and historic events and how they impacted many aspects of the lives of Americans. The real estate market had its share of ups and downs as Americans adjusted to new realities of shutdowns, spending more time at home, and mortgage rates that continue to remain exceptionally low. It leaves many real estate professionals and American homeowners and would-be home owners trying to predict what 2021 could possibly have in store for them.
In a piece published by Norada Real Estate Investments, written by Marco Santarelli, many questions for the future of the market in 2021 are posed and explanations and predictions are provided. The article addresses questions Americans might have about a potential affordability crisis, if the value of homes will continue to rise, what the trends in new home construction might be and whether or not a housing market crash is predicted in 2021.
Santarelli indicates, “While we still face economic and health challenges ahead, it is no doubt that the nation will continue to recover from this pandemic and an improving economy will continue to prop up the housing market competition. Industry experts believe the housing market will remain strong and is set to break more records in 2021.” He describes how it continues to be a seller’s market and a continued rise in home prices could lead to affordability issues.
To add, some experts, such as Zillow Economic Research, predict that home values will, in fact, continue to increase. Some predictions call for a 3.6% increase over the next three months and appreciate of home value by up to 10% through the end of 2021.
As the demands for houses continues to outpace the availability, new home construction attempts to fill the gap. However, according to the article, “Land and material availability and a persistent skilled labor shortage will continue to place upward pressure on construction costs resulting in limited housing supply.”
Read the entire article for more predictions for 2021.
Real Estate professionals and analysts have continued to look into why there continues to be a decrease in housing inventory along with rising home prices. Redfin has determined that more Americans are deciding to stay exactly where they are instead of moving on to another home. In fact, they have found that, “the typical American homeowner is now staying in their home for five years longer than they did just nine years ago.”
In an article published by Housing Wire, reporter Julia Falcon states that the average homeowner in the U.S. is staying in their home for about 13 years instead of only 8 years as they did in 2010. There are U.S. cities that blow those statistics out of the water with homeowners deciding to stay in their homes for 20 years or more. Cities such as Salt Lake City, Houston, San Antonio, and Dallas are in Texas see home owners that have stayed in their homes since the 1950s.
According to the article, “Redfin agent Christopher Dillard states ‘Because prices have been going up, and folks are gaining more and more equity, it’s hard to justify selling when there aren’t many if any affordable options.’”
Read the entire article.
Buyers often wonder which the time of year it is best to purchase a home. Many know that the spring market is when many homes come on the market and buyers begin looking in order to purchase homes before the start of the next school year. However, as far as deciding when to buy a home based on getting the best deal, it turn out that the time is now!
In an article published by Forbes, the week of September 22-28 has been identified, by Realtor.com as the “best week of the year to buy a house”. In the analysis, it was found that the number of listings increase by more than 6% on average this week and the home on the market are just over 2% more affordable as price cuts close around 6% trend this week of the year.
Overall, buyers will see less competition this week as the summer has come to a close and a number of buyers have exited the market for the year. Nationally, the competition is down by a quarter, with some local areas seeing a decrease in buyers close to 40%.
Sellers can look forward to some positive news regarding this first week of fall, “…buyers have a more serious mindset and they are focused on making a purchase before the end of the year.” Perhaps this unlikely time of the year to buy a home will be a win-win for sellers wanting to close the deal before the end of the year as well.
Read the entire article.
On Wednesday, the Federal Reserve governors decided to increase the interest rate by .25 percent. According to an article written by Amber Tuaufen, published by inman.com, “The Federal Reserve sets the rate for the overnight exchange of money by banks; governors adjust the rate to help curb inflation or stimulate growth, depending on their assessment of what would be best for the economy.”
Despite the fact that this move does not directly affect the mortgage rates, it can have an impact on the rates for mortgages. In fact, an increase in mortgage rates has been anticipated for quite some time now. Many prospective home buyers have been advised that the historically low interest rates were coming to an end; however, rates continued remain low. Many buyers may not have felt pressure to move forward with a home purchase, leading to sluggish sales. It would appear, now, the rates are indeed going to begin to increase.
This potential increase of mortgage rates could have some negative impact on home sales. Yet, some agents feel that the continued affordability of housing coupled with the steady increase of rates could put pressure on prospective home buyers to make a decision and not delay their home purchase any longer.
Read the entire article.
Photo Credit: Svilen Milev