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FEBRUARY 2021 MARKET NEWSLETTER Truckee, Golf Course Communities, Tahoe Donner, Northstar, Donner Summit, Alpine/Squaw, North & West Shore Lake Tahoe, CA.
2021 Residential National Real Estate Trends to Expect December 22, 2020 As we enter 2021, the real estate sector is still adapting to the ongoing challenges of the COVID-19 pandemic. Not all types of real estate have been affected in the same way, with homeowners and potential homebuyers, for instance, facing a very different outlook than commercial real estate investors. If you're considering buying or selling a home in 2021, here's what you should expect in the year ahead.
Prices will keep rising - but at a slower pace According to Lawrence Yun of the National Association of Realtors® (NAR), U.S. home prices will climb 3% in 2021, compared to a 6% rise from 2019 to 2020. He also projected a 9% increase in existing home sales. Realtor.com's overall 2021 forecast is a bit more optimistic about prices, predicting a 5.7% jump, but less so about sales, foreseeing a 7% uptick. Price growth in 2021 might ultimately fall short of 2020 levels due to an influx of available properties into the market throughout the second half of the year. Supply was very constrained in the latter months of 2020. Per NAR, there were only 1.47 million homes for sale in the entire country at the end of September 2020, the lowest level since the firm began tracking this metric in 1982. Such low supply combined with high demand has, so far, boosted prices and made it more expensive to buy a home since the pandemic started. For homebuyers, affordability could remain a challenge in 2021. At the same time, the expected increase in sellers willing to list their homes — as a result of reduced uncertainty after the November 2020 U.S. elections and once COVID-19 vaccines roll out — and a recovery in construction could eventually provide some relief.
Low interest rates for mortgages should continue The Federal Open Market Committee (FOMC) acted quickly in 2020 to cut interest rates in response to the coronavirus-induced downturn. The result has been some of the lowest rates for mortgages on record. On Dec. 3, 2020, Freddie Mac listed the rate for a 30-year mortgage at 2.71%, an all-time low. The 30-year rate is expected to climb in 2021, albeit not by that much. The Realtor.com report foresees a rate of 3.4% by the end of 2021. But unless home supply substantially increases in 2021, these low rates could go to waste for many buyers, according to Freddie Mac's own analysis. That's because realistic buying options in desirable areas could remain limited. In the meantime, current homeowners may look to take advantage of low rates to refinance their mortgages. Black Knight estimated a total of 9 million refinance transactions for 2020, and this momentum should continue into 2021 due to the millions of borrowers who could still benefit (more than 19 million as of November 2020, per Black Knight). Article Compliments of Federal Savings Bank
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