Seller’s Market? Buyer’s Market?
What will 2021 bring?
In 2020 homes prices rose on average 7.3% sometimes 8%…
During the last 6 recessions, only 2 of them affected homes values negatively.
Home owners have a record level of home equity for homeowners. This provides a buffer to protect families if they experience financial difficulties and is one reason for the generational low in foreclosure rates…on average, homeowners in California have gained over $30,000 in additional equity in 2020!
Home value growth hasn’t ended yet — Zillow Economic Research predicts that home values will increase by 3.6% in the next three months until Feb 2021. Another forecast is that home values will appreciate by 10.3% in the twelve months ending November 2021. The current forecast also calls for sales volume to remain elevated in the coming year, finishing 2021 at 6.9 million sales, the most since 2005. In previous forecasts, the company predicted a 4.8 percent increase in home values between August 2020 and August 2021
Realtor.com is predicting High buyer demand and still-lagging supply will keep prices growing, but at a slower pace than 2020 as buyers contend with mortgage rate and price increases that create affordability challenges.
Redfin states: Even as the pandemic hopefully nears its end, Americans will continue to buy homes that fit their new lifestyle. As a result, 2021 will see more home sales than any year since 2006. Annual sales growth will increase from 5% in 2020 to over 10% in 2021.Rising prices for existing homes will increasingly drive more buyers to consider a new one. And because home buyers are now more eager to buy in suburban and rural areas where land is cheaper than in the cities, there will be more areas where homes can be built profitably. By the end of the year, the homeownership rate will rise above 69% for the first time since 2005.
Two things to watch are supply and affordability. Will there be enough homes for those that need them, and at what price?
Home equity and affordable Interest rates are a allowing people to move up into homes that they truly want…
Moving into 2021 we anticipate interest rates in the low 3%, which is a little higher than today’s 2.65% and add in rising home prices, this can make what home buyers can afford less…this is a huge reason why waiting to buy may not be a great idea!
Sellers will be in a good position in 2021. Home prices will hit new highs, even though the pace of growth slows. Buyers will remain plentiful and low mortgage rates keep purchasing power healthy, but monthly mortgage costs will rise as mortgage rates steady and home prices continue to rise. Sellers hoping to see further double-digit price gains will likely be disappointed, but those setting reasonable expectations can expect to see a timely sale and will want to focus on their next move.
What will 2021 be like for buyers?
The housing market in 2021 will be much more hospitable for buyers as an increased number of existing sellers and ramp up in new construction restore some bargaining power for buyers, especially in the second half of the year. Still-low mortgage rates help buyers afford home price increases that will be much more manageable than the price increases seen in 2020. With companies continuing to allow workers more flexibility, we see the inner as well as outer suburbs and smaller towns continuing to entice home buyers and builders. Areas that can ramp up affordable housing supply will benefit and see an influx of buyers.
While buyers will be able to visit homes in person, a strong preference for most shopping to buy, they will take advantage of the industry’s acceleration toward technology to check out homes, explore neighborhoods, and research the purchase online, saving time and energy to focus on a more selectively curated list of homes to view in person.
Although the pace will slow from late 2020’s frenzy, fast sales will remain the norm in many parts of the country which will be a challenge felt particularly for first-time buyers learning the ins and outs of making a major decision in a fast-moving environment. Buyers who prepare by honing in on the neighborhood and home characteristics that are must-haves vs. nice-to-haves and lining up financing including a pre-approval will have an edge.
It’s more important than ever to have a plan when selling or buying a san diego home! Please, contact me to get guidance and resources to help you plan your next move