What To Expect From The US Housing Market In 2021
Realtor.com recently released their annual housing predictions report for next year. For 2021, the site is projecting record-high prices and a continuous rise in pricing due to an increased desire to sell after the Covid-19 pandemic. Mortgage interest rates hit record lows within the past year which helped fuel the housing market as the pandemic worsened, however, it’s predicted that these rates will also increase in the new year, which would make monthly housing payments more expensive.
The pace of these pricing increases, however, will likely be slow. In general prices are expected to jump by 5.7% total as a result of more properties being placed on the market. Real estate industry heads are expecting the second half of the year will be full of houses on the market, because at that point a vaccine will likely be heavily distributed and in-person showings/open houses will hopefully be able to resume normally.
“We expect affordability to become a bigger challenge, it’s going to make housing more expensive. But home prices will rise slower than this year.”
Danielle Hale is a Chief Economist for realtor.com, who also predicted that mortgage rates will begin to slowly increase within the second half of 2021. The current rate is at an all time low of 2.7%, however, it’s projected to increase to 3.4% by the end of next year. While that increase isn’t that intense, and will likely take the whole year, the residual increasing in preexisting mortgage payments will be noticeable.
On a more positive note, sales of existing homes on the market, and future listings, are expected to increase by 7% in 2021, which would be amazing for the economy overall. This will be a direct result of individuals finally being able to leave their homes and seek a new property with features that they missed within the past ten months of lockdown.
“Home prices can’t outpace income growth indefinitely. The higher prices rise, the harder it is for more buyers to get into the market. That tends to dampen demand.”
Again, most experts are expecting to see a more positive change in the second half of 2021 under the assumption that at that point a majority of the country will be vaccinated and the industry will return back to almost full normalcy. There’s no doubt that they’ll be plenty of houses on the market, the problem will come if there’s enough demand to meet the supply; especially considering the fact that America is also involved in yet another economic crisis that has left tens of millions of citizens unemployed.
It’s also predicted that houses currently being developed and future residential construction projects will drive the market back up for individuals looking to rent. According to Hale, however, it’s all going to be dependent on every buyer/seller’s local market and economy: “Sellers are still expected to get top dollar for their home sales, the biggest challenge is finding their new home.”
If the nation undergoes a second lockdown in the beginning of 2021, as president-elect Joe Biden claims we will be, then fewer homes will also be placed on the market for obvious reasons, causing the market to slow tremendously. However, when it comes down to it, we’re talking about people’s lives over the US housing market, so it should be a no-brainer.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at email@example.com.