2021 Housing Market Forecast
If we have learned anything from the tough lessons of 2020, it’s that even the best forecasting can be completely thrown out the window. That said, experts say that they are optimistic about the 2021 Housing Market despite declining home sales. Experts attribute the small decline in home selling to a supply shortage but believe that increased sellers hitting the market in combination with builders ramping up, should pave the way for a great housing market in 2021. According to a recent report by NAR about declining home sales and looking at the statistics broken down by regions, the West was actually unchanged and did not even experience a slight decline. It was mostly seen in the Midwest.
Home prices are expected to continue their steady rise as there is still a huge demand of qualified borrowers combined with a low supply. According to the CoreLogic Case Shriller Index, annual home price gains hit a 9.5% increase just this past November 2020. Real Estate Investors may have to be creative in finding great flip properties at a bargain but on the flip side (no pun intended) they will be able to sell at an optimal price and look to increase their profit margins with higher-end or heavily sought-after renovations. For ideas on some of what buyers are looking for in 2021 read PCG’s Blog on Interior Design Trends 2021.
Low mortgage rates have certainly fueled the 2020 housing market and the Biden Administration is also expected to keep mortgage rates low through 2021. The new administration is also proposing multiple incentives to fuel the housing market as included in the new President’s proposed fiscal stimulus package. However, included in this plan is an extension on extending a national moratorium on evictions and foreclosures through the end of September 2021. This impacts house investors that typically look for foreclosures, however there is still opportunity to be found. Many landlords have gone without rent on some of their short-term rental properties that were bought to earn income as a vacation rental on sites such as VRBO and Airbnb. With travel so restricted many are not generating the income they need to and will likely look to sell. With plenty of qualified borrowers and high demand the market needs more listings.
Lawrence Yun,NAR’s chief economist predicts a very strong year for the housing market as rates remaining low means we will likely reach 6.49 existing home sales in 2021. According to Yun, there is a high demand of potential buyers which should rise with more listings, but the supply shortage does continue to drive home prices up.
The good news is that the demand to buy homes is still very strong and is likely to continue to remain strong, real estate investors just need to be creative finding their next flip project as supply is lower.