Amidst a global pandemic in 2020, real estate surged and was a bright spot in the economy. Will the market stay hot in 2021 or are we headed for a slow down? Here are what the experts are saying. References to full articles where predictions were gleaned are linked at the bottom.
1. Rates May Further Decrease - Freddie Mac & NAR forecast rates for a 30-yr mortgage to hover around 3.075% in 2021 (compared to 3.125% in 2020).
2. Home Prices & Sales Expected to Increase - NAR chief economist Lawrence Yun predicts new-home sales will jump 23 percent and existing-home sales to climb 9 percent in 2021. He predicts home prices will rise by 3 percent in 2021.
3. Suburban Living - The move to smaller cities and suburbs will continue beyond the pandemic due to a lasting work-from-home trend. A recent survey showed 47% of Realtors said clients are interested in moving to the suburbs and 39% to a rural area.
4. Increases in Relocation - More than 14.5 million Americans are expected to relocate in 2021 as families who can work from home opt to put down roots in more affordable areas.
5. Increase in Construction - Building permits were up 21% at the end of 2020 & more homes are expected to be built than any other year, all the way back to 2006 with lower costs of construction and historically low interest rates.
6. Economic Growth Expected - The Federal Reserve predicts the Real GDP will grow 4.2 percent next year and 3.2 percent in 2022. The Fed predicts the unemployment rate to fall to 5.0% in 2021.
7. Market Crash? Unlikely. - The housing market has shown surprising strength and resilience with prices climbing throughout 2020. This should carry into 2021 due to 4 factors that continue to shield the market: strong buyer demand, low rates, low inventory, and qualified buyers.
8. Digital Experience - Digital alternatives in home tours, communication and lending will continue to be the consumer expectation.
9. Top 10 Housing Markets - NAR identified 10 markets that have shown resilience during the pandemic & which should perform well in a post-pandemic market- Atlanta; Boise, Idaho; Charleston, S.C.; Dallas-Fort Worth; Des Moines; Indianapolis; Madison, Wis.; Phoenix; Provo, Utah; and Spokane, Wash.
10. Millennials will Drive the Market - First-time home buyers will remain a strong force in the market as the largest cohorts of Millennials are turning 30 – critical household formation years. But also, the oldest Millennials are increasingly contributing to the trade-up market. As a result, 2021 home sales activity is expected to remain strong and outpace 2020 levels.
Experts all seem to agree that 2021 will remain a strong year for housing. Inventory in Napa in December was at a 1.1 month supply, down 50% from last year. Buyers are active due to low rates, making this an excellent time to sell. If you are considering a move call or email me to see how I will personally invest in getting your home sold.