December 21, 2020
The housing market has been on a record-setting moment, with low mortgage rates and relocations due to the global pandemic, the quarantine stays at home order, and the necessity to work remotely. While we get closer and closer to 2020 end, it is important to hear expert opinions and expectations of real estate experts to more accurately understand how the housing market will behave by 2021. Thanks to Brenda Richardson (2020), in this article we will learn the experts' prognosis on the topic.
The realtor.com chief economist expects a sales growth of 7% and for prices to rise around 5.7%. Mortgage rates will slowly lift, nevertheless, sale and price growth will skyrocket by demand, low mortgage rates, and a recovering economy. The newest generations (Millenials and Gen Z) entering the buyer's role, will have a rough start, however, fast-rising prices will create a barrier for these individuals who lack existing home equity to tap for down payment savings. Nonetheless, it is expected that sellers will grow more comfortable with the market like single-family homes will grow another 9% in 2021. The market will be seller-friendly with low mortgage rates.
Senior vice president and chief economist of the National Association of Home Builders told Richardson (2020) that single-family constructions are continuously growing due to record highs on home builder confidences, although it is at a lower growth rate than last year. New home sales growth is expected to slow down due to the fact that the increasing share of sales comes from homes that have not started construction yet. However, the shift in housing demand´s geography to lower-density markets and low-interest rates will make buyer´s traffic strong. Apartment construction will face some frailty for multifamily rental development, but remodeling should remain strong and grow further. Residential construction will also face some struggles due to supplies and building materials deliveries being delayed at a much higher cost.
The better.com chief product officer expects that the technology and use of it will increase in the housing industry to increase buyers and execute deals. 2020 brought new changes from online property touring to eClosings. Homeowners will look to refinance much sooner than expected due to the low-interest rates but those low rates might not stay for long because of all of the other economical and social changes occurring around the country. Regardless of the rate backdrop, the millennial generation home buying will continue to grow.
ATTOM Data Solutions chief product officer expresses that there is an unbelievable low inventory, less than 500,000 homes are on sale, and mortgage rates are at a 50 year low. It is possible that these supply and demand factors will push prices even higher in the first half of 2021 but the inventory and pricing will alleviate for the second half.
CoreLogic´s deputy chief economist thinks that 2021 will hold in store for us a windmill of surprises. Interest rates are expected to remain low and will benefit to lower some of the affordability concerns coming from the rapid home price appreciation this year. First-time buyers will remain strong in the market, many millennials are turning 30 (a critical household formation year) but also the older millennials are contributing to the trade-up market so 2021 home sales are expected to remain strong. Inventory levels might see some development, this might be because of sellers who have been on the sidelines because of distressed owners and because of new constructions. However, the housing market will continue to struggle due to the imbalance of supply and demand, which will lead to stronger biddings among buyers and sellers causing a distant home price appreciation.
The co-founder of Landed explains that due to the pandemic, individuals who can work from home are buying homes but since they are staying indoors for so long they are also changing their housing preferences, such as lighting and space. It is likely that the housing market will remain strong due to low mortgage rates and forbearance programs. Millennials shift unto the suburbs and mid-size will continue because the pandemic has accelerated the generational trends; marriage, family, and housing. Prices will therefore increase in metropolitan areas and rise in mid-size cities.
The National Association of Real Estate Broker´s executive director thinks that the housing market will continue to have low-interest rates. Congress is likely to approve funding and legislation for the creation of a new closing cost and down-payment assistance program and/or tax credit to help increase the homeownership rate of minority groups in the country.
The National Rental Home Council executive director comments that there are two things important to watch out for; supply and affordability. The virus had an effect on the accelerated move toward single-family homes and this move has been increased by millennials, who are transitioning into a household formation years, however, this generation is at its low on wealthiness, especially at a time when homeownership costs continue to rise. Their demand for housing won't go away but it might take longer than expected.
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Richardson, B. (2020, December 18). Experts Predict What The Housing Market Will Be Like In 2021. Retrieved December 21, 2020, from https://www.forbes.com/sites/brendarichardson/2020/12/16/experts-predict-what-the-housing-market-will-be-like-in-2021/?sh=6f5b18136dce
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