Over the last year, we’ve seen home equity increase as property values appreciated by 7.3 percent! We saw interest rates drop on home loans to under 3 percent, adding to already high buyer demand. Many sellers received multiple offers on their homes with offers often over list price. You probably noticed that within a few days of a “For Sale” sign appearing in a yard, the home went under contract. Well, there’s good news for both buyers and sellers in the 2021 housing market.
For home sellers, there is no worry that the market will grow cold. Buyer demand is expected to stay strong for many reasons. With the changes in work-from-home and remote learning, people are finding they have different needs in their homes. They are free to move to different locations. Interest rates continue to be low, allowing buyers to afford more house for their money. Home applications are up and home sales are increasing despite low inventory. Winter sales are expected to stay high as pent-up buyer demand continues. All of these factors make it a great selling environment, plus home values are expected to increase 3-4 percent in 2021, putting even more money in the seller’s pocket. Danielle Hale, chief economist for Realtor.com, predicts home prices to rise 5.7 percent above 2020 levels.
For home buyers, more inventory is expected to come on the market. New home builders are responding to buyer demand and there is a surge in new construction. New home builds are expected to increase by 9 percent this year. Some people affected by the pandemic will have to liquidate their homes, and others relocating will open up new housing opportunities. As Covid treatment and vaccines progress, it is projected that sellers who were holding off will put their homes on the market. Mortgage interest rates continue to hit record low levels, making home buying affordable. Hale expects home sales to increase 7 percent in 2021 over last year.
For both home buyers and sellers, 2021 looks like a great year to buy and sell. “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” (KCM).
Check out my video: https://youtu.be/m4zcpO-szjM
Sources:
KCM. Keeping Current Matters. “2021 Market Forecast: What You Need to Plan for Success” and “Housing Market Forecast: What’s Ahead in 2021”.
Realtor.com. “Weekly Economic and Housing Market Update.” 8 Jan 2021.
