The 2021 Real Estate Market

A pretty positive outlook for the new year

This year will make history for several reasons from a worldwide pandemic to our country’s presidential election. Throughout this year we have seen some ups and downs but what was truly noteworthy was how the real estate market prevailed in most regions. Homeowners examined their needs for space and amenities while others continued to bid on their next home where they could take advantage of record low interest rates. As we begin 2021 there is speculation on how the real estate market will perform by various economists. Here is a look at some of the key factors.

The Economy

While there are difficult challenges with how the pandemic has affected some, this has been only one factor in an otherwise fairly strong economy. Vaccines are now starting to get administered which are slated to continue among more groups of Americans which will assist us all with getting businesses back on track. 

Mortgage Rates

In recent years we may have figured that we had seen the lowest of the low for mortgage rates, but then came 2020. Previously, homeowners were thrilled to see home loan rates in the 3’s and 4’s but this year loan rates plummeted into the high 2’s for 30 year fixed mortgages. Interest rates are projected to stay around 3% per Freddie Mac and Fannie Mae which will help continue to fuel positive market activity. 

Number of Home Sales 

While the economy improves and interest rates remain low, home values are predicted to continue in appreciation as more look to buy. Realtor.com’s Chief Economist states “We expect home sales in 2021 to come in 7.0% above 2020 levels, following a more normal seasonal trend and building momentum through the spring and sustaining the pace in the second half of the year.” Additionally, others have noted that the pandemic has changed people’s vacationing habits and could lead to the purchase of more second home or vacation type properties. 

Home Prices

Finally, with all of these combined factors fueling market activity along with lower inventory it is expected that home prices will continue to increase. A recent report states that The National Association of Realtors (NAR) predicts that home prices could rise 6% during the new year.