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16
Real Estate in 2021 - Plenty of Reasons for Optimism
"The strong housing market in 2020 was a spectacular surprise, and the positive trend will continue in 2021." - Lawrence Yun NAR Chief Economist
After a sharp decline in housing sales due to COVID-19 from mid-March until roughly the end of May, housing sales rose to heights not seen since the record years of 2005-2006. Across our region in 2020 we experienced:
•16% increase in sales volume over 2019
•10% more properties sold than in 2019
•The average sales price increased by 6% compared to 2019
•The number of properties for sale 12-31- 2020 was down by 40% from 12-31- 2019. Inventory has hit an all-time low.
There was considerable variation from market to market, which can be seen on our Regional Activity Chart:
Forecast for 2021
Mortgage Rates Will Stay Near Historic Lows of 3% on Average
Low mortgage rates have been the key reason for the housing market's strong performance in the midst of the pandemic and high unemployment. Rates are forecast to rise slightly, perhaps up to 3.2% so they are still attractive. As of January 13, rates with no points were about 1% lower than this time last year:
•15-year Conventional Fixed 2%
•30-year Conventional Fixed 2.5%
•FHA/VA 30-year Fixed 2.375%
It's still a great time to refinance to lock in the lowest rates in history!
Appreciation and Price Increases Will Continue
In our region, homes appreciated from 1.53% to 4.1% last year, depending on the market and price range. See the chart below for appreciation details by market and changes in the average sales prices by market on the chart above.
Best Time Ever to Sell a Home
The number of properties for sale is at an all-time low. For sellers, that means:
•Less competition from other properties for sale
•More buyers + fewer properties for sale = higher prices for sellers
•Realtors can list and show properties safely - either virtually or online
The good news for buyers: more homes are likely to become available during the last 6 months of 2021.
"2021 Housing Sales Are Predicted to Be Up 5% to 7% by Unit Count, With Prices Continuing to Rise." - Steve Murray REAL Trends Consulting
While low mortgage rates are a highly influential factor, many other drivers are fueling the real estate market: the COVID-19 vaccine, buyer confidence as the economy and jobs are improving, and life cycle events such as marriage, changes to family size, and retirement. During the pandemic, we also learned that most people who worked in offices could be just as productive at home. This new work-from-home reality has fueled home sales from owners who want home offices or are considering moving further from town for more room and lower prices.
