2021 Housing Market Forecast
2021 Housing Market Forecast
2020 – What a year! COVID-19 wreaked havoc to our lives and plans with cancelled vacations, home schooling our children, working from home or even losing jobs. Lives were turned upside down in a hot minute.
On the flip side, while people stayed home, they came to some conclusions. The FED acted quickly and home builders jumped in with both feet. What does all this mean for the 2021 housing market?
Let’s see what industry experts forecasting for 2021 in the housing market:
Reading the data accumulated during the 2020 pandemic year can help forecast what to expect next year. While no one knows for sure, this is as close to a crystal ball as we can come…
In third quarter, 2020, the average equity gain per homeowner was $17,000. That’s the highest in over six years!
Unlike the Great Recession, the national share of homes with a mortgage that showed negative equity was only 3% for the third quarter of 2020. That is substantially lower than 2008-2012.
Some speculate that most homeowners have 20% equity in their homes due to soaring home prices. If they have been hit by job or income loss, they can still sell to pay off their mortgage and avoid foreclosure.
The FED has lowered interest rates in answer to and to help stimulate spending. When they raise or lower the cost to borrow money, it stimulates the economy by incentivizing businesses and people to invest, hire and spend money, putting more into the economy.
That trickles down to the mortgage industry and it answers by lowering the interest rates of home mortgages. This year, we have seen historically low mortgage interest rates.
Consumer’s dollars can buy more home than they could a year ago! For instance, in Nov of 2019, if you bought a home at $400,000, the mortgage payment was $1,657. If you bought that same home today, it would cost $429,200 BUT the mortgage payment would be $1.581.
The consensus is that the rates will remain pretty low for 2021 but starting to creep up by the end of the year. Taking advantage of these by buying or refinancing now is a strategy worth checking out!
Supply and Demand
Currently, the supply (inventory) of homes for sale is the lowest it’s been in 7 years. This is why we are continuing to stay in a “Seller’s Market.” This means prices also go up because there are not enough homes to satisfy the demand from buyers.
Home builders are attempting to answer the call for more inventory with more new homes being built right now than in a very long time.
Existing homes on the market are still very low (less than a month’s supply in the Metro Indy 16 county area.) This is why we are seeing homes sell very quickly and for top dollar. There are buyers lined up just waiting to buy!
Demand, on the other hand, is still very high. The pandemic has caused people to take a look at their housing and consider the options. During the shelter in place, consumers made some decisions, like:
- Need a dedicated home office space due to working from home
- Need extra space for home schooling the children
- Want more space inside and outside the home since spending more time at home
- Preferring to have more space between neighbors is driving some urban dwellers toward small towns and suburban lifestyles.
Due to the above, experts are predicting 2021 will still be a seller’s market but with a bit less increase in price due to expecting more existing and new build homes to come on the market.
Selling now, ahead of the rush, is a great strategy to get the most out of your home.
Of the 3% of homeowners who are behind on their mortgage, we will see some foreclosures. Will it be enough to change to a Buyer’s Market? Maybe, but with the equity homeowners have thanks to unprecedented price increase, it is likely a lot of them will sell before officially going into a foreclosure process.
- Seller’s Market to continue into 2021, albeit, not as strong as we have seen this year.
- Mortgage interest rates will stay low, but will likely inch up by Q4 of 2021 decreasing buying power of buyers
- The equity growth homeowners have enjoyed will start to level off as more inventory – existing and new builds – come on the market
And that’s what we are hearing as the 2021 Housing Market Forecast. Want to talk some more? Give us a call today!