2021 Mortgage and Real Estate Forecast
Wondering what 2021 has in store for us?
I don't have a crystal ball, but I did gather predictions for 2021 from 3 major real estate sources: National Association of Realtors, Realtor.com, and Redfin.
While they all agree that interest rates will remain low in 2021, their outlooks vary on the strength of the economy and the housing market in 2021. Here's what they had to say:
National Association of Realtors
Lawrence Yun, Chief Economist for the National Association of Realtors:
"2020 has been a year of surprises," Yun said about the strong housing market, despite the pandemic. "This winter may be one of the best winters for sales activity," Yun said. "It won't match summer or spring sales numbers, but on a winter-to-winter comparison, this could be one of the best breakout years just based on the fact that pending contracts are at such a higher level." Yun also said he believes that the economy will make a strong recovery- but that the recovery was dependent on the vaccine.
Here are some more of Yun's predictions:
Redfin Chief Economist Daryl Fairweather had a number of predictions for the 2021 housing market.
Here are just a few:
Mortgage rates will remain historically low at 3%.
"Although the U.S. may be able to vaccinate most of its citizens by the end of 2021, many countries will struggle to distribute vaccines. Thus, the global economic recovery could take much longer, which would make U.S. mortgage-backed securities attractive to international investors, keeping mortgage rates low."
There will be more home sales than in any year since 2006, but price growth will slow.
"As Covid-19 cases hopefully decline due to vaccination, Redfin expects more new listings to make for a more balanced market and more home sales. New listings declined 3% in 2020 from the previous year, but in 2021, Redfin expects new listings to grow by over 5%. The increase in new listings combined with slowly rising mortgage rates will cause price growth to moderate to under 5% in 2021, down from 6% [in 2020.]"
The homeownership rate will reach 70% for the first time since 2005
"The normalization of remote work has set off a domino effect of increased homeownership. People who lived in expensive cities only to be close to work are abandoning their apartments to buy their first home in more affordable places. As small-time landlords in urban areas lose tenants, they will sell their investment properties. This surge in condos for sale, which currently sell for a 17% discount relative to single-family homes, will give many city-dwellers the opportunity to become first-time homebuyers as well."