Real Estate Insights

U.S Housing Market Forecast and Predictions for 2021

2 years 9 months ago I 0 minutes read I 72 Views

Renee Tulliani

In 2020, due to the coronavirus arrival, the seasonal trend and other measurements for home sales were thrown out of the whack. The February housing data, before Covid-19 was pretty juicy. The housing sector was outperforming the economy this year. It is said if the February pattern continued, total existing-home sales would have been greater than last year. But Corona Crises took some juice out of the housing market. The market dropped to new lows and was briefly put on hold in the first half of 2020 but in the second half, the market started to heat up and made an impressive rebound which made up for all the market losses. Here are Real Estate trends that were observed in 2020.
<h2 style="text-align: justify;">Mortgage interest rates dropped:</h2>
Interest rates dropped significantly as compared to the past years. In the United States, the average monthly mortgage rate on a 30-year fixed-rate mortgage ranged from 3.72 to 4.46 percent in 2019. While in 2020, this rate dropped to 2.88%, which is pretty low. As a great part of the country was in lockdown during the March-July period. A drop in the interest rates drove the buyer demand. A lower mortgage rate means a lower amount of payment every month. Hence, many buyers were motivated to buy a house sooner to lock the best interest rate. Home sellers also benefit from falling interest rates, as more prospective buyers can afford their homes. It is an ideal time to put a home on the market, especially with mortgage rates not expected to rise.
<img src="//s3-us-east-2.amazonaws.com/dealty-prod/uploads/files/000/008/473/original/Mortgage_interest_rates_dropped.jpg?1608839966" alt="" width="800" height="603" />
<h2 style="line-height: 115%; text-align: justify;">Home sales:</h2>
US Existing Home Sales is at a current level of 6.69M, down from 6.86M last month and up from 5.32M one year ago. This is a change of -2.48% from last month and 25.75% from one year ago. This means there is a higher chance that your dream home will be snatched up fast. Buying a house in 2020, you won’t have much time to hem and haw over your house search. With such high buyer demand, you would have to make a decision quickly.
<img src="//s3-us-east-2.amazonaws.com/dealty-prod/uploads/files/000/008/474/original/Home_sales.jpg?1608839991" alt="" width="800" height="450" />
<h2 style="line-height: 115%; text-align: justify;">Low inventory:</h2>
In the first half of 2020, the housing inventory was very low! There weren’t many houses listed for sale. The housing market saw more than half a million fewer homes available for sale than the prior year. The count of newly listed properties in October also decreased by 7.7% since last year. This factor purely benefited the seller as there were less competition and more demand.
<h2 style="line-height: 115%; text-align: justify;">Home prices rose:</h2>
An increase in demand for the houses was observed that automatically raised the prices. The housing market experienced short listings and high demand during the summer months. Due to the intense demand and low inventory, the pricing continued to tick upward every week since May. The home prices in The United States grew from 5.519 percent in July 2019 to 7.415 percent in July 2020. The situation was purely in favor of the sellers. They can enjoy a nice profit from their current home by getting the right offer. Buyers might feel pressure and struggle with affordability. But a piece of advice to all the buyers, not to feel the pressure and stay within your budget.
<img src="//s3-us-east-2.amazonaws.com/dealty-prod/uploads/files/000/008/475/original/Home_prices_rose.jpg?1608840006" alt="" width="800" height="465" />
<h2 style="line-height: 115%; text-align: justify;">Remote working:</h2>
Online real estate services are growing. Due to the pandemic, many real estate services including <a href="https://yourdealty.com/blog">us</a> created an online platform to buy and sell homes. All the home-related details and pictures are available online. Even if you want to sell your house you can put up all the details you want. These platforms charge you money equal to an agent commission. But there is less hassle when you are dealing online. The trend of the real estate market to grow online is expected to grow furthermore eliminating agents through the process. 
A seasonal slowdown was expected before the start of November but the housing market continued to boom. The traffic of buyers and sellers remained abnormally strong. Buyers are waiting for the time the housing market will slow down and lead to a decrease in price growth but it has been red hot since the post-pandemic recovery. The market now is past the recovery phase and is booming even higher home sales as compared to pre-pandemic. The demand, supply, pricing, and sales of the housing are rising above the Pre-Covid levels. The housing market has been on fire this year. As we are near the end of 2020, here are some predictions of Real estate experts for 2021.
<h2 style="line-height: 115%; text-align: justify;">Will it Crash or Boom in 2021?</h2>
In 2021, the housing market is far from collapsing. It played and continues to play a significant supporting role in the economic recovery of the country.
<h2 style="line-height: 115%; text-align: justify;">Home demand and sales:</h2>
Each and every sector shifted its office operations limited to the home. This created a need to change housing, for example seeking more space. As companies are still deciding on whether to continue work from home policy or not. People are essentially looking for cities with a low cost of living. Hence increasing the demand for houses. The real estate experts predict that house sales are expected to grow by 7 percent.
<h2 style="line-height: 115%; text-align: justify;">Home prices:</h2>
House prices will rise to another 5.7 percent on top of 2020 already high levels. Sales and price growth will be powered by still strong demand, a recovering economy, and low mortgage rates. Strong buyer demand and a lagging supply will cause the price to rise continuously but at a slower pace than 2020.
<h2 style="line-height: 115%; text-align: justify;">Mortgage rates:</h2>
Although <a href="https://www.usbank.com/home-loans/mortgage/mortgage-rates.html">mortgage rates</a> are expected to be gradually increasing. It will be a difficult time for first-time buyers as they have to deal with the rising mortgage rates, and higher prices creating a barrier to entry for them.
While 2020 took us by surprise, 2021 is expected to have new different surprises for us. Still, the expectations from the housing market remain optimistic. Secondly, the low-interest rates have inspired many new home buyers this year as low mortgage rates provided greater purchasing power. It will inspire even more buyers next year.
In 2021, it is expected that alternative funding options for homeowners will be expanded to provide more flexibility during periods of the financial crisis.
<h2 style="line-height: 115%; text-align: justify;">Future of Real Estate agents:</h2>
In 2020, the game shifted from visiting properties to discovering and locking prices online. In 2021, it is expected that the housing sector will use more technology to engage buyers and sellers. There is no doubt that a successful real estate agent is worth their weight in gold and it is impossible to believe that they will never use their services. With today's buyers, especially <a href="https://en.wikipedia.org/wiki/Millennials">millennials</a>, we are seeing a drastic transformation of the real estate industry, exerting more power over the buying and selling process than we have ever seen before. Future real estate transactions will take place in a fully digital format, where purchasing and sales of commercial and residential real estate are done seamlessly. Significant stakeholders can see increased speed and lower transaction costs with the use of these digitized channels.
<h2 style="line-height: 115%; text-align: justify;">Conclusion:</h2>
 We hope that this deep dive into our predictions of the housing market for 2021 gives you a solid understanding of what you should expect in the years to come. All in all, when it comes to real estate investment, the future looks promising. The real estate market is not going to collapse anytime soon. We can help if you're looking for help finding property listings or a place to sell your house. Make yourself a part of <a href="https://yourdealty.com/">Dealty</a>. It is free and it takes less than 5 minutes to <a href="https://yourdealty.com/sign-up">sign up</a>.

Renee Tulliani

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