Experts Predict What the Housing Market Will be Like in 2021
The housing market had been unpredictable in 2020.
Mortgages hit a record low, and with the coronavirus restrictions, more people were working remotely. It seemed a good time to relocate.
During this time, the home prices reached new levels as buyers continued to demand more.
As we step in 2021, the following is what the real estate experts have predicted.
Danielle Hale: She is the chief economist of realtor.com, and she believes that the sales will grow 7 percent in 2021. Mortgage rates will also increase gradually. The sales and price growth will be fueled by higher demand and a recovering economy along with lower mortgage rates. The higher demand and lagging supply will cause prices to increase, but at a lower rate than what was seen in 2020.
Millennial and Gen-Z buyers are expected to play a fundamental role in the growth of the house markets. However, the fast-rising prices will create a bigger barrier to entry for the first time buyers from these generations. They do not have the equity to invest in something so huge. Hale also believes that single-family housing starts are expected to increase by 9 percent in 2021. The market is expected to remain seller-friendly.
Robert Dietz: He is the senior vice president and chief economist of the National Association of Home Builders. According to them, single-family construction continued to grow and will do so in 2021. However, it will be at a lower rate than in 2019. Slowing of new home sales growth will occur because a growing share of sales comes from home and not construction. However, buyer traffic will be strong.
National surveys indicate that consumers are willing to spend more on housing in 2021 than in previous years. This is especially because the economy is starting to recover following the pandemic. Strong growth is expected in 2021 for housing rents and home prices. A report from the Federal Reserve Bank of New York stated that the median household expects to increase spending by 3.7% in the next year. This is the most optimistic outlook regarding the real estate market.
The housing market is driven by other factors such as the shortage of available housing inventory and low interest rates. The market also indicates that prices might rise in 2021, which could impact affordability unless the mortgage rates continue to fall down.
The Federal Housing Finance Agency stated that it would continue to evaluate the coronavirus's impact on the mortgage industry and amend its policies as needed. However, because of the record-low mortgage rates and lack of housing supply, demand has increased, which tilted the real estate market in favor of the sellers. So in the first couple of months of 2021, things might remain this way.
According to Zillow Economic Research, home values will increase by 3.6 % in the first three months of 2021. Another forecast shows that home values will increase by around 10.3% in the next twelve months.
