2021 has finally arrived, and here are five major trends that are expected to define this year’s real estate market:
1. Home prices will continue rising in most U.S. cities. Zillow predicts that prices will rise by an average of 5.8% in 2021. Other major research companies are predicting that prices will increase by as much as 7% or even double digits. If you looked at just the real estate market, you’d have no clue we’re in the middle of a pandemic or economic recession.
2. Housing inventory will remain tight. We’ve already seen record-low numbers in Santa Clarita, the greater Southern California area, and the nation at large. The National Association of Realtors reports that throughout 2020, there was a steady decline of inventory, and they expect to see more of the same this year for a couple of reasons. First, many potential sellers think conditions are too uncertain right now to list their homes. Many also believe that they can make more money by waiting until later on to list their homes. This is something to be aware of if you’re a buyer. If you plan on buying midyear, for example, you should start the process now so you don’t get stuck.
3. Home sales will remain steady. As I said, there was no real blip in the real estate market during 2020—things just forged ahead, and a lot of that was due to the market’s ability to operate despite the impact of COVID-19. The systems my team and I utilized, for instance, allowed us to coordinate home sales while avoiding face-to-face contact with clients.
4. Mortgage rates will hover around 3%. Freddie Mac and the Mortgage Bankers Association both predict that rates will hold steady between 3.1% and 3.2% during the first half of the year. Other companies claim they’ll dip into the 2% range. Either way, it’s a great time to take advantage of these low rates. As stated by Freddie Mac, “Given the weakness in the broader economy, the Federal Reserve’s signal that its policy rate will remain low until inflation picks up, and no signs of inflation, we forecast mortgage rates to remain flat over the next year. From the third quarter of 2020 through the end of 2021, we forecast mortgage rates to remain unchanged at 3%.”
5. 2021 will be a good year for refinancing. A lot of people have already taken advantage of low mortgage rates to refinance their homes, and there will be plenty more opportunities for that this coming year. If you’re interested in refinancing your home, get in touch with me—I know plenty of great local lenders I’d be happy to refer you to.
If you’d like to talk more about what the future holds for our market in 2021 or have any other real estate questions, feel free to call or email me anytime. I’d love to speak with you.