What would be the 2021 forecast and can we predict what will happen in the real estate market? If anything, this year has taught Americans that nothing is for sure and life can change in a moment’s notice. We have been made aware that many hidden outside elements can be tossed into the mixture of our complacent lives. But optimism is the new word being tossed around among real estate brokers.
The Bonus of Refinancing
According to the Mortgage Bankers Association there was a surge of applications for private home purchases. After months holding onto imagined stability, we are beginning to feel confident about moving on and taking advantage of historic levels of lower mortgage rates.
These lower rates are the key to sustaining the housing market. They have also been a special bonus for refinancing, renovations, redesigning of older homes while lowering monthly payments. This trend is predicted to continue into 2021 as homeowners take advantage of the historic lower rates offered this year.
Calming Our Worst Fears
With the worst fears of 2020 softened, real estate economists are sending signals that resilience and strength will win out over uncertainty and risk. Economic uncertainty is one reason for low inventory levels within the real estate market. On a similar vein, homeowners who plan to sell within the next three years are waiting to see the outcome of their uncertain future.
Real estate market conditions and values in the U.S. are expected to rebound in 2021 and trend even higher in 2022, with single-family homes outperforming other sectors such as commercial, retail, hotel and rentals, according to a report released recently by the Urban Land Institute. The fact is housing demand among home buyers in the U.S. has been surprisingly strong as sales activity has increased steadily in most cities.
What About Prices?
Realtor.com®‘s 2021 housing forecast predicts record-high prices will continue rising in 2021, delivering a blow to first-time buyers and those on a tight budget. Growth in U.S. housing markets, are also expected to tick up again, making monthly housing payments a bit more expensive. Other real estate sectors will lag behind single-family housing, but will hold up better than economists had expected in the spring of 2020. While the boom that coronavirus created in the housing market will slow down some changes will continue on into the next year.
Tight inventory conditions will continue to give sellers the upper hand in 2021. Home prices are expected to keep climbing in most parts of the U.S., as borrowers continue to enjoy low mortgage rates throughout the next year.
Real Estate Forecast 2021 Possibilities
It is expected that new single-family construction starts will fall as existing homes in “move in now” condition rises. The retail vacancy rate is expected to rise slightly along with office vacancy.
The new year will be a welcome change for many people impacted by the deadly pandemic that pounded our economy. The surprising light has been the bounce back of the housing market. How will things look when this is all over? Know that somethings have been radically altered and will remain so as high unemployment rates and rising infection rates persist all over the country. Look for a hangover after the crisis passes and settles but for now real estate is the light. At Katchen Company we are optimistic.
*Disclaimer: This article includes predictions for the U.S. real estate market into 2021. Economic and housing forecasts an educated guess and should be treated as such. No one can predict future real estate trends with complete accuracy.
**Image by Tumisu from Pixabay