This year has been an unparalleled one for real estate. Although the pandemic played a major factor in slowing down much of the economy, the housing sector boomed in 2020.
The success was nearly unprecedented. Buyer demand soared (up 40% at one point), and bidding wars were a constant presence while mortgage rates dropped — hitting a new record lows time and time again, according to Freddie Mac.
Surprisingly, the market remained strong through the traditionally slower fall and winter months while continuing to show strongly entering the first quarter of 2021 despite an ever-worsening pandemic.
Will the current housing boom end with 2020? Probably not. Experts predict continued low rates, rising and a continued march to the suburban life, among other emerging trends.
Here’s a sneak peek into what to expect in 2021:
Mortgage rates will stay low.
Most experts expect mortgage rates to stay low for quite a while — through 2021 and beyond, actually.
Rich Weidel, CEO of Princeton Mortgage in New Jersey advises, “We are cautiously optimistic mortgage rates will continue to stay low and even slightly decrease in the short- and medium-term.”
Home prices will keep rising, but vaccines could ease the pressure.
Home prices soared in 2020, backed by limited inventory and low interest rates. According to Realtor.com, home prices actually increased 12.7% between November 2019 and November 2020.
Although the start the start of the year should see some steep increases, CoreLogic’s chief economist Frank Nothaft predicts that the steep price growth we have seen will begin to slow once vaccines reach the general public.
The suburbs will continue their hot streak.
Demand for suburban homes has exploded since the pandemic began. According to a Realtor.com report, prices have consistently risen quicker in the suburbs since March. These desirable homes have also sold faster and been in shorter supply than in more urban communities.
“The flexibility many people now enjoy through working remotely is contributing to migration patterns,” said Nick Bailey, chief customer officer at real estate brokerage RE/MAX. “
The pandemic has altered the way that many people live their lives and has increased a desire for more space. Working remotely, homeschooling and distance learning from home, are causing buyers to wish for larger properties and more neighborhood amenities, both of which the suburbs provide.
New year, same strong market
2020 was an extraordinary year for housing. And 2021 is shaping up to be follow suit. As Bailey stated, “Following an unforgettable year in so many ways, 2021 is likely to see a strong, active housing market fueled by still-historically low rates, an increase in homebuilding and strong demand.”