This Year’s Real Estate Market Forecast
A positive outlook for 2021
The year 2020 will be marked in history for many reasons from a pandemic to a presidential election. Throughout last year we have seen some ups and downs but what was particularly noteworthy was how the real estate market performed regardless in most areas. Homeowners had reevaluated their needs for space and amenities while buyers continued to bid on their next home where they could take advantage of the exceptionally low interest rates. As we begin 2021 there are relatively positive ideas on how the market will perform by various economists. Here is a closer look at some key points.
The Economy
While there are specific challenges with how the pandemic has affected some, this has been only one factor in what had been an otherwise fairly strong economy. Now, vaccines are being administered which are scheduled to continue among more groups of Americans which will help with getting businesses back on track.
Mortgage Rates
In the past few years we thought we had seen the lowest of the low for mortgage rates, but then came 2020. Previously homeowners were ignited by seeing home loan rates in the 3’s and 4’s but this year rates dipped into the high 2’s for 30 year fixed mortgages. Interest rates are expected to remain around 3% per Freddie Mac and Fannie Mae which will help continue to fuel market activity.
Home Sales
While the economy improves and interest rates remain low, homes are predicted to continue in appreciation as more look to purchase. Realtor.com’s Chief Economist states “We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.” Furthermore, others have shared that the pandemic has changed how people are vacationing and could lead to the purchase of more second home or vacation properties.
Home Prices
Finally, with all of these factors fueling market activity along with lower inventory it is expected that home prices will continue to rise. A recent report states that The National Association of Realtors (NAR) anticipates that home prices could rise 6% during the new year.
